SEC En Banc Case No. 07-24-007 Second Pay Financing, Inc.

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

Unit 904 One Global City, 5ht Ave. Cor. 25th St. Fort Bonifacio,Taguig City In the Matter of. Second Pay Financing Inc. (CS201909038 C.A.No.1217) Petitioner. PROMULGATION:18 December 2024 Circular No. 03, Series of 2022, 2019, FINLEND Order dated 07 February 2024, FINLEND Order No. 06. 2023, FINLEND Order dated 08 June 2023 FLCD CDO Case No.4 Series of 2024 For: Violation of the SEC Memorandum Memorandum Circular No. 19, Series of SEC En Banc Case No.07-24-007l

RESOLUTION

("Movant" or "Second Pay"), praying that the Commission lifts the Cease and Desist Order dated 07 June 2023 (the "Assailed CD0") issued by the dispositive portion of which reads: for Lifting of Cease and Desist Order Ad Cautelam dated 01 July 2024 (the "Motion to Lift") filed on 02 July 2024 by Second Pay Financing, Inc. Commission's Financing and Lending Companies Division (FLCD), the For consideration of the Commission En Banc is the Verified Motion

and/or any other media, and facilitating any lending to immediately CEASE AND DESIST from engaging in, carrying out, promoting, which includes offering and advertising their lending business through the internet activity(ies) or transaction(s). SO ORDERED. FINANCING, including its owners, operators, promotors, representatives,agents,AND ALL PERSONS CLAIMING AND ACTING FOR AND,IN THEIR BEHALF,are hereby DIRECTED "WHEREFORE, premises consideredSECOND PAY

having secured from the Commission a Certificate of Authority No. 1217. Second Pay is also a grantee of a license to engage in lending business, Philippine laws, having been issued a Certificate of Incorporation with Company Registration Number CS201908038 on 14 October 2019 Second Pay is domestic corporation organized and existing under

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Its principal office address is located at 3F Abano Building, Blk 10, Lot 4 MRT Avenue,Central Signage Village,Taguig City

Second Pay to immediately cease and desist from engaging in, carrying and financial consumers, to wit: and/or any other media, and/or facilitating any lending activity(ies). The Second Pay to comply with the following Memorandum Circulars (MCs) and Orders for purposes of preventing fraud, injury or harm to the public out, or promoting/advertising its lending business through the internet FLCD anchored the need to issue the Assailed CDO on the failure of On 07 June 2024, the FLCD issued the Assailed CD0, directing

1. MC No. 03, Series of 2022 (MC 3), which requires the

2 MC No. 28 Series of 2022 (MC 28), which requires the submission of the Impact Evaluation Report on or before January 15 of each year beginning 2023;

3 submission of official e-mail and contact number; MC No.19,Series of 2019 (MC 19),which requires the

4 Order dated 07 February2024 (the"February Order),which disclosure of advertisements and reporting of Online Lending Platforms;

5 6. registration with the Credit Information Corporation; and Order dated 08 June 2023 (the"June Order"),which requires requires the submission of complaints handling mechanism; Order dated 06 July 2023 (the "July Order"),which requires

the submission of the list of Third-Party Service Providers.

the requirements prescribed under applicable laws, rules and from the Commission, prevented it from timely informing the latter of its in compliance thereto.2 Movant agrees with the need to fully comply with records, it has actually complied with the requirements prescribed under regards MC 28 and the June Order, Second Pay submitted in evidence its updated GIS, and the Complaints and Handling Mechanism, respectively regulations, and manifested that its failure to receive the relevant notices Assailed CDO is warranted considering that based on its corporate compliance.3 a) MC3,b MC 19,c) the February Order,and(dthe July Order.1 As In its Motion to Lift, Second Pay maintained that the lifting of the

3 Ibid. Par. 7. 1 Motion to Lift dated 1 July 20 24. Par. 4. 2 Ibid. Pars. 4.2 and 4.4.

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prejudice to Second Pay's possible administrative liability(ies). maintained that the lifting of the Assailed CDO should be without cessation of the grave or irreparable injury or prejudice to financial consumers which the Assailed CDO sought to prevent.The FLCD however procedural issue relating to the failure of Second Pay to timely file its Motion to Lift, the FLCD nonetheless acknowledged and accepted the compliance made by Second Pay. According to the FLCD, Second Pay's compliance with the relevant regulations and orders have resulted in the Order Ad Cautelam,4 the FLCD supported the position of Second Pay and prayed for the lifting of the Assailed CDO. While the FLCD raised a In its Comment on the Verified Motion for lifting of Cease and Desist

specifically contained in Section 1-4 Rule 1 Part I of the 2016 Rules, to again, this Commission has consistently implemented the established procedure are liberally construed to facilitate the speedy and inexpensive disposition of the matter(s) presented herein.5 We find this rule motion to lift the same within five (5) days from receipt thereof, time and jurisprudential doctrine that in administrative proceedings, rules of Wit: filing of the Motion to Lift by Second Pay is not fatal to warrant the denial of the Motion to Lift.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") requires a person subject of a CD0 to file a request or The procedural issue raised by the FLCD relative to the belated

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

which are not bound by technical rules of procedure. (Emphasis supplied) [Birkenstock Orthopaedie GMBH and Co.v Philippine Shoe Expo Marketing Corporation., G.R.No.194307,November and expedite justice. Technicalities should never be used to defeat the substantive rights of the just determination of his cause, free from the constraints of technicalities." primordial policy is a faithful 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, 4 Dated 31 July 2024. 5 "It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather than its 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 other party. Every party-litigant must be afforded the amplest opportunity for the proper and 20, 2013]. Indeed the

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Assailed CDO is warranted by the circumstances attendant in the Commission agrees with both Second Pay and FLCD that the lifting of the evidence on record 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 irreparable injury or prejudice to financial consumers, thus: Commission to issue a CDO to prevent or restrain an act which amounts Section 6(d)(4) of the FCPA provides for the authority of the

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

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

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(4) Issuance of a cease and desist order to the financial service provider, the proceedings shall be be final. If a hearing is requested by the financial technical rules of evidence, and all issues shall be its designated body, upon request made by the days from its receipt of the order. If no such hearing is requested within the said period, the order shall conducted summarily without adhering to the hearing if in the financial regulator's judgment, the financial service provider shall be afforded an opportunity to defend its act or practice in a summary hearing before the financial regulator or financial service provider within five (5) calendar 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 service provider without the necessity of a prior act or practice, unless restrained, amounts to fraud

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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 an injunction, the issuance of which has consistently been justified and sustained to effectively prevent fraud, violation of a law, rule or regulation, or protect investors/ financial consumers from sustaining grave or irreparable injury or prejudice.We find the foregoing reiterated in SEC v CJH Development Corporation as follows:

that there exists prima facie evidence that respondents are the CDO that its issuance is based on the findings of the SEC "In the present case,it is clear from the dispositive portion of

engaged in the bu AL1M securities without the prope Commission.Prima facie mea unless disproved by some evide the instant case, it mean tained in the assailed CDd roved by contrary eviden is not final, is just provisional an tion thereunder is merely temporary, etermination of the

may not be the subject of an appeal." (Emphasis and is, therefore clear that the subject CDO, being interlocutory underscoring supplied) parties' respecti subsequent hearing. It

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

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

7 G.R. No. 240835, 29 March 2023. 6 G.R. No. 210316. November 28, 2016

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violation of a law, rule or regulation, or a probability that irreparable It is the determination by the Commission that there is fraud

damage/injury would befall on consumers/investors which justifies the immediate issuance of an injunction. Primanila Plans, Inc. v SEc: emphasized that the purpose for the prompt issuance of a CDO is to protect investors (or consumers, as the case may be), to wit:

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

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

these requisites were duly satisfied by the SEC prior to its issuance of the subject cease and desist order."9 (Emphasis 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 supplied) baseless and improvident issuances, the authority of the SEC under this rule is nonetheless with defined limits. A cease "To equally protect individuals and corporations from

finding that Second Pay allegedly failed to comply with the requirements In the instant case, the Assailed CDO was issued on the basis of a

: G.R. No. 193791, August 6, 2014. 9SEC v CJH Development Corporation.G.R.No.210316.November 28,2016

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of the relevant Memorandum Circulars and Orders of the FLCD Considering that the compliance by Second Pay was already recognized and affirmed by the FLCD, We agree that the reasons/grounds for the issuance of the Assailed CDO has effectively 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 Second Pay has already committed in relation to the relevant Memorandum Circulars and Orders.

hereby GRANTED.The CEASE AND DESIST ORDER dated 07 June 2024 issued against Second Pay Financing is hereby LIFTED. Cease and Desist Order Ad Cautelam filed by Second Pay Financing, Inc. is WHEREFORE,premises considered,the Verified Motion for Lifting of

Let a copy of this Resolution be posted on the Commission's website

for their information and appropriate action. and furnished to all operating departments and offices of the Commission

SO ORDERED.

Makati City,Philippines

MM EMILIO B.AQUINO

Chairperson

JAVEY PAUL D.FRANCISCO KARLO S.BELLO

Commissioner Comm ssioner

CJILL BRYANT T.FERNANDE GELIO Y V.QUEVEDO

Commissioner Commissioner