GOODPOCKET AND EASYMONEY LENDING CORPORATION

Isecurities and Exchange Commission Republic of the Philippines Department of Finance COMMISSION EN BANC IN THE MATTER OF: GOODPOCKET AND EASYMONEY LENDING CORPORATION SEC CDO CASE NO. 01-22-077 ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT, Movant. X CEASE AND DESIST ORDER Orderi (the "Motion") filed by the Enforcement and Investor Protection This resolves the Motion for Issuance of a Cease and Desist Department ("EIPD") on 6 January 2022 praying that a Cease and Desist LENDING CORPORATION (collectively referred to as: "Online Lending Order ("CDO") be issued against GOODPOCKET and EASYMONEY well as the owners of the hosting sites of the Online Lending Operators who are operating, engaging in, carrying out and/or promoting license from the Commission. lending/financing business and related activities without the requisite Operators'J, including their agents, representatives and promoters, as RELEVANT FACTS information on her alleged loan with the Online Lending Operators was Rose Baltazar (the "Complainant") who reported the alleged unfair harassment that she experienced as a consequence thereof. The posted/published libelous statements against her person in social media and tagged/labelled her as a scammer. The same message as well as likewise sent by the latter to her contacts.3 collection practices carried out by the Online Lending Operators, and Complainant The present Motion was triggered by a complaint2 filed by Ruffa alleged that the Online Lending Operators On the basis thereof, the EIPD proceeded to conduct a formal investigation for possible violation of Republic Act No. 9474 or the 2 Annex "A" of the Motion. 3 Annexes "A1" to "A-37" of the Motion. 1 Dated on 5 January 2022. CERTIFIED TRUE COPY OF SEG OGC THE DOCUMENTS ON RECORD PAGE 2 T Y PAGE GOODPOCKET AND EASYMONEY SEC CD0 Case No. 01-22-077 Cease and Desist Order NDINGCORPORATION Page 2 of 7 Lending Company Regulation Act of 2007 which the Commission is mandated to administer and implement. For this purpose, the EIPD in evidence.5 activities, and was able to confirm that the Online Lending Operators business.4 The foregoing was confirmed and attested to by the handling investigator who executed and issued an affidavit which was submitted looked into the website of the Online Lending Operators and the social media platforms used by the latter in carrying out their online lending were indeed actually operating and maintaining an online lending which is required by the Lending Company Regulation Act of 2007 of all entities that are engaged in lending business/activities. This finding was confirmed by the Corporate Governance and Finance Department subject of the complaint revealed that the Online Lending Operators are not registered as a corporation, partnership or a one-person corporation, ("CGFD") through a Certification dated 22 December 20216 which stated Finally, the EIPD also alleged that its investigation on the matter Commission. that the Online Lending Operators are not registered with the ISSUE the issuance of a CDO against the Online Lending Operators? Whether the evidence on record presented by the EIPD warrants RULING hereby grants the same. The Commission finds merit in the Motion filed by the EIPD and 8799 or the Securities Regulation Code (SRC), thus: Commission is specifically provided in Section 5.1(a) of Republic Act No. The powers and authority, as well as the jurisdiction of the the Investment Houses law, the Financing Company Act and other existing following powers and functions: "Section 5. Powers and Functions of the Commission - 5.1. The Commission shall act with transparency and shall have the powers and functions provided by this code, Presidential Decree No. 902-A, the Corporation Code, laws. Pursuant thereto the Commission shall have, among others, the (a) Have jurisdiction and supervision over all corporations, partnership or license or a permit issued by the Government; associations who are the grantees of primary franchises and/or a XXX XXX X 6 Annex "D" of the Motion 5 Annex "C" of the Motion 4 Annex "B" to "B-7" of the Motion THE DOCUMENTS ON RECORD CertIFIFd true CoPy oF SC OGC O A PAGFS 83 GOODPOCKET AND EASYMONEY LENDING CORPORATION SEC CDO Case No.01-22-077 Cease and Desist Order Page 3 of 7 Regulate, investigate or supervise the activities of persons to ensure .compliance; XXX XXX XXX (n the objectives and purpose of these laws." (Emphasis and underscoring Exercise such other powers as may be provided by law as well as those supplied) which may be implied from or which are necessary or incidental to the carrying out of, the express powers granted the Commission to achieve persons, and exact compliance with laws administered by it, the Supreme In relation to the performance of its authority to investigate that the Commission has the concomitant duty to impose the appropriate sanctions/penalties for non-compliance, thus: Court emphasized in Provident International Resources Corp. v. Venus, the fact that a corporation owes its existence to the concession of its fines or other penalties for violations of the Revised Securities Act, as well as implementing rules and directives of the SEC, such as may be "It can be said that the SEC's regulatory authority over private of a corporation's concerns. This authority more vividly springs from corporate franchise from the state. Under its regulatory responsibilities, the SEc may pass upon applications for, or may suspend or revoke (after due notice and hearing), certificates of registration of corporations, partnerships and associations (excluding) cooperatives, homeowners' association, and labor unions); compel legal and regulatory compliances; conduct inspections; and impose warranted." (Emphasis supplied) corporations encompasses a wide margin of areas, touching nearly all implement is Republic Act No. 9474, otherwise known as the "Lending and should have an authority to operate issued by the Commission, to Company Regulation Act of 2007" (the "Lending Company Regulation operating as lending companies should be registered as a corporation Wit: Act"), Section 4 of which specifically requires that persons or entities Among the existing laws that the Commission is mandated to disallowed from engaging in the business of granting loans to the public one year after the date of effectivity of this Act. established only as a corporation: Provided That existing lending investors organized as single proprietorships or partnerships shall be "SEc. 4.Form of Organization.- A lending_company shall be No lending company shall conduct business unless granted an supplied) authority to operate by the SEc." (Emphasis and underscoring SEC OGC 7 G.R. No. 167041, June 17, 2008. THE DOCUMENTS ON RECORD CERTIFIED TRUE COPY OF PAGE 4 OF PAGES GOODPOCKET AND EASYMONEY LENDING CORPORATION SEC CDO Case No. 01-22-077 Cease and Desist Order Page 4 af 7 without being registered as a corporation and without a subsisting The Lending Company Regulation Act penalizes any person who, business of a lending company, to wit: authority to operate obtained from the Commission, engages in the years or both, at the discretion of the court, shall be imposed upon: (P10,000.00) and not more than Fifty thousand pesos(P50,000.00) or imprisonment of not less than six months but not more than ten (10) "SEc. 12.Penalty.- A fine of not less than Ten Thousand Pesos N company without a validly subsisting authority to operate from Any person who shall engage in the business of a lending the SEC. 2. willingly: The president, treasurer and other officers of the corporation, including the managing officer thereof, who shall knowingly and 2 validly subsisting authority to operate from the SEC; Engage in the business of a lending company without a b Hold themselves out to be a lending company, either through other representations without authority; stationery, commercial paper, or other document, or through advertisement in whatever form, whether in its C Make use of a trade or firm name containing the words designation that would give the public the impression that it is engaged in the business of a lending company as defined in this Act without authority; and "lending company" or "lending investor" or any other d Violate the provisions of this Act." (Emphasis and underscoring supplied) to effectively prevent and mitigate the commission of practices that the Commission is mandated in Section 2 of the Lending Company Regulation Act to implement the policy of regulating lending companies prejudicial to public interest, thus: In relation to the lending business and industry, it bears emphasis (Emphasis supplied) State to regulate the establishment of lending companies and to place their operation on a sound, efficient and stable condition to derive the optimum advantages from them as an additional source of credit; to prevent and mitigate, as far as practicable, practices prejudicial to public interest; and to lay down the minimum requirements and standards under which they may be established and do business." "SEC. 2. Declaration of Policy. - It is hereby declared the policy of the SEC OGC CERTIFHED TRUE COPY OF THE DOCUMENTS ON RECORD PAGE G OF G AG GOODPOCKET AND EASYMONEY LENDING CORPORATION SEC CD0 Case No. 01-22-077 Cease and Desist Order Page 5 of 7 to protect the public, Section 179(f) and (p) of the RCC authorizes it to To ensure that the Commission is able to perform this mandate and issue a cease and desist order and to perform such other powers which are incidental or necessary in carrying out its mandate, to wit: Section 179. Powers, Functions, and Jurisdiction of the Commission. - The Commission shall have the power and authority to: XXX XXXXXX f Issue cease and desist orders ex parte to prevent imminent fraud or injury to the public; XXX XXX XXX p Exercise such other powers provided by law or those, which expressly granted to the Commission. (Emphasis and underscoring supplied) may be necessary or incidental to carrying out the powers to validly engage in lending activities. The act of the Online Lending appropriate penalties provided under Section 12 of the Lending records of the Commission that will show that these Online Lending Operators in engaging in the lending business sans the required Lending Company Regulation Act, which warrants the imposition of the Lending Operators are not registered with the Commission either as Operators have been issued the Certificate of Authority which is required registrations/licenses constitutes a clear violation of Section 4 of the Company Regulation Act. corporations, partnerships, or OPc. Neither is there anything on the The certification8 issued by the CGFD stating that the Online resulted in the public actually Online Lending Operators are illegally engaging in lending activities as Lending Operators in offering and providing loans to the public constitutes actual fraud9 which was intentionally employed to lead the lending business which is not and has never been the case. This, in fact the latter are not registered as corporations, and have no Certificate of Authority issued by the Commission. Thus, the act of these Online public into the belief that they are legally authorized to engage in the Moreover, the evidence presented by the EIPD shows that the taking loans from the Online Lending 9 "Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional fraud is construed as a fraud because of its detrimental effect upon public interests and public or private confidence, even though the act is not done with an actual'design to commit positive fraud'or injury upon other persons." (Encinares vs Achero, G.R. No. 161419, August 25, 2009) deception practiced hy means of the misrepresentation or concealment of a material fact. Constructive 8 Annex "B" ERIFIED TRUE COPY OF THE DOCUMENTS ON RECORD 2 O PAC GOODPOCKET AND EASYMONEY LENDING CORPORATION SEC CDO Case No. 01-22-077 Cease and Desist Order Page 6 of 7 Operators as shown in the complaint and in the evidence presented by the EIPD. On account thereof, the Commission finds and so holds that the Commission under Section 179 (f) and (p), in relation to the SRC and the issuance of a CDO is warranted in the instant case not only to stop the led by the Online Lending Operators to the belief that they are operating a legitimate business. This is a power that is expressly granted to the illegal act, but also to prevent the continued fraud on the public who are Lending Company Regulation Act. times upheld, and that the public is protected from persons who carry out unauthorized or illegal lending activities. offering and providing loans to the public, charging high interest rates, and subjecting its debtors to unfair treatment through abusive and even libelous language in collecting the loaned amount, have no place in a society that is governed by and faithfully adheres to positive laws. The Commission is duty-bound to strictly implement the provisions of the Lending Company Regulation Act, ensure that public interest is at all The acts of these unregistered Online Lending Operators in illegally EASYMONEY LENDING CORPORATION, its owners, operators, ORDERED to immediately CEASE AND DESIST from engaging in, carrying] out, promoting and facilitating any lending activity/transaction until they have incorporated and have secured from this Commission the requisite Certificate of Incorporation and Certificate of Authority to Operate as Lending Companies or Financing Companies. CLAIMING AND ACTING FOR AND IN THEIR BEHALF, are hereby promoters, representatives, agents AND ANY AND ALL PERSONS WHEREFORE, premises considered,GOODPOCKETand or any other media, and to delete/remove any and all materials involving owners, operators, promoters, representatives, agents and any and all from offering and advertising their lending business through the internet or covering the same. persons acting for and in their behalf, are directed to CEASE and DESIST GOODPOCKET and EASYMONEY LENDING CORPORATION, its The EIPD is hereby DIRECTED to: 1. Cause the posting of a copy of this CDO in the Commission's 2. government in order to determine, identify, and apprehend website, and the publication of the same in two (2) Coordinate newspapers of general circulation; investigation and With enforcement the appropriate agency(ies)- cyber-criminal ofthe CERTIFIFD TRUE COPY OF THE DOCUMENTS ON RECORD PAGE oF8 PAGE GOODPOCKET AND EASYMONEY LENDING CORPORATION SEC CDO Case No. 01-22-077 Cease and Desist Order Page 7 of 7 3. to determine and recommend the filing of a criminal Submit a formal compliance report, by way of pleading, to the Commission En Banc within ten (10) days from receipt of this CORPORATION, including its author, creator, owner and its officers, or any person, agent, representative conniving with them. The EIPD is also directed to conduct an investigation CDO. the responsible persons involved in the illegal online complaint, if warranted; and operations of GOODPOCKET and EASYMONEY LENDING to lift thereof within five (5) days from the date of its posting or parties subject of the Cease and Desist Order may file a Verified Motion 4-3, Rule IV, Part II of the 2016 Rules of Procedure of the Commission, the publication. In accordance with the provisions, of Sec. 64.310 of the SRC and Sec. SO ORDERED Pasay City, Philippines; 18 January 2022 AM EmILIO B. : AQUINO Chairperson EPHYRO"LUIS B. AMATONG Commissioner JAVEY PAUL D. FRANCISCO Commissioner KELVIN LESTER K.LEE KARLO BELLO Commissioner Commt ioner request within the time herein prescribed, the cease and desist order shall automatically be Jifted.. 10 Any person against whom a cease and desist order was issued may, within five (5) days from 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 termination of the hearing. If the Commission fails to resolve the The documents on CQFY 8f RF ORF TAAFS