SEC CDO Case No. 09-19-054In the matter of: INSTANT PERA;QUICKPESO. ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT, Movant.

securitles and Exchange Commission CoMMISSion eN BAnc Republic of the Philippines Department ol Finance

In the matter of: INSTANT PERA: QUICKPESO.

SEC CDO Case No. 09-19-054

DEPARTMENT, INVESTOR PROTECTION ENFORCEMENT AND Movant.

RESOLUTION

Quick Peso is not included among the online lending operators who are covered by the said Order. Lift Cease and Desist Order! filed by Respondent-Movant 9F Lending Philippines Incorporated praying that the Cease and Desist Order2 issued by the Securities and Exchange Commission against its online lending application Quick Peso be lifted and that an Order be issued clarifying that its For consideration of the Commission En Banc is a Verified Motion to

THE PARTIES

sanctions including suspension or revocation of the lending company's of Republic Act No. 9474, otherwise known as the Lending Company propio or upon a verified complaint by the public, after conducting a proper issuance of the CDO or injunction a Regulation Act of 2007, the SEC is authorized to impose such administrative and to, among others, initiate the issuance of a Cease and Desist Order Rules of Procedure of the Securities and Exchange Commission ("SEC"), an the General Counsel ("OGC") investigation or verification, if there is a finding that the grounds for the action for the issuance of a CDO or filing of an application with the Commission En Banc, through the Office of the Department tasked to investigate, motu propio or upon complaint or referral, violations of the law and the rules and regulations of the Commission ("CDO") by the Commission. Pursuant to Section 4-1, Rule IV of the 2016 Movant Enforcement and Investor Protection Department ("EIPD") is injunction may be commenced upon the any operating department, either motu e present. Likewise, under Section 9(f)

- Dated 20 September 2019 2 Dated 12 September 2019

For: Motion to Lift Ceasc and Desist Orde SFC En Banc Case No. 09-19-O$4 Page 2 of 1 a the matter of OuickoespMoy

is fraudulent or can reasonably be expected to cause significant, imminent, and irreparable danger or injury to public safety or welfare. of the Revised Corporation Code of the Philippines (RCC) grants the Commission among others, the power to issue CDOs ex parte to prevent imminent fraud or injury to the public and to enjoin an act or practice which authority to operate and the imposition of fines for violations of the Act and regulations issued by the SEC in pursuance thereto. Moreover, Section 179(f)

issued on 15 March 2019 in its favor.3 registered under the laws of the Republic of the Philippines with SEC Registration No. CS201904471 and authorized by the Commission to operate as a lending company on the basis of the Certificate of Authority No. 2916 Respondent-Movant 9F, on the other hand, is a corporation duly

ANTECEDENT FACTS

to waiver of charges and fees, and violate the right to privacy of their debtors Online Lending Operators impose high interest rates, unilaterally implement onerous and unreasonable terms and conditions, make misrepresentations as and complainants. Operate as Lending Companies or Financing Companies.* Included in the Memorandum are several complaints received by the CGFD against 2019 (Memorandum) from the Corporate Governance and Finance Department ("CGFD") endorsing for its appropriate action a list of Online Lending Applications which have not been issued Certificates of Authority to entities/online applications/platforms. Most of these complaints alleged that On 13 August 2019, EIPD received a Memorandum dated 07 August

where it was able to confirm the existence of the websites, Facebook Accounts and/or Google Applications of the subject Online Lending Operators: Acting on the said Memorandum, EIPD conducted its investigation

and information gathered by the EIPD also disclosed that before a person can apply for a loan from the Online Lending Operators, the online lending Ioans they are offering. Most of these' websites, Facebook Accounts and/or Google Applications, however, do not state the name of the corporations or entities who owns and/or operates them. Moreover, the pieces of evidence Operators are being advertised and promoted to entice people to avail of the The lending businesses and related activities of the Online Lending

* Annex "B" of the Motion for Issuance of Cease and Desist Order dated !1 September 2019 3 Annex "D" of 9F's Verified Motion to Lift Cease and Desist Order Ad Cautelam dated 20 September 4 Annex "A" of the Motion for Issuance of Cease and Desist Order dated 11 September 2019 5 Annex "C" of the Motion for Issuance of Cease and Desist Order dated 11 September 2019 20

SEC En Bunc Case No. 09-19-054 Page $ of 11 In the matter of.: Quickpeso, Mowau. For Moton to Lift Cease and Desist Ord

be filed before the proper barangay and/or the matter will be posted in the social media if payments of the amount due is not made. contained in the latter's mobile phones informing the same that the person Likewise, the Online Lending Operators threatens its debtors that cases will online lending operator gains access to the applicant's personal information information is being utilized by the online lending operators to exact prompt and full payments from its debtors by sending a text blast to the persons applications must be downloaded and installed in the applicant's mobile phone. By downloading and installing the online lending application, the contained in the mobile phone which also includes the contact list, Facebook accounts, and email addresses of all individuals stored therein. This personal concerned obtained a loan from them but refuses to pay the amount due

to have suffered depression, sleepless nights, embarrassment, humiliation, and adversely affected their health and well-being. Due to these abusive collection practices, debtors/complainants alleged

lending applications, their agents, representatives, promoters, and hosting September 2019, enjoining the operators and owners of the subject online sites from operating, engaging in, carrying out and/or promoting its lending/financing business. In view of the foregoing, a CDO was issued by the Commission on 12

prayed that the issued CDO against it be lifted since it is not the entity upon which the subject CDO is directed against. admitted that it is currently doing business under the name "Quick Peso" and Cautelam dated 20 September 2019, through its counsel. In its motion, 9F 9F thereafter filed its Verified Motion to Lift Cease and Desist Order Ad

application is a Peso Symbol;8 and (3) It has registered the use of "Quick Peso" word mark and its logo with the Intellectual Property Office.? who have applied for license however, 9F has no knowledge or information, on the status of the said entities;" (2) 9F's Quick Peso online lending operator 9F alleged that (1) there are currently several online iending operators

been issued a Certificate of Authority to Operate as Lending Company, as is being conducted and carried out by a duly incorporated entity which has 9F also maintains that "Quick Peso" transactions are not illegal since it

3 Annexes "A" and "A-1" of 9F's Verified Motion to Lift Cease and Desist Order Ad Cautelam dated 20 5 Annex "B" of 9F's Verified Motion to Lift Cease and Desist Order Ad Catitelam dated 20 September Annex "C" and "C-1" of 9F's Verified Motion to Lift Cease and Desist Order Ad Cautelam dated 20 September 2019 Septembcr 2019 2

Page 4 ot tt In the matet of: Quickpeso. Movant SEc En B Casc No. 0919-os4 For: Motion to Lin Cease ycfi xist Orde

Authorrity No. 2916.10 evidenced by its Company Registration No. CS201904471 and Certificate of

the hearing on the Motion to Lift CDO dated 20 September 2019 filed by it. directing 9F to Appear before the Office of the General Counsel ("OGC") for On 24 September 2019, an Order was issued by the Commission

to file its position paper within a period of ten (10) days from the date of hearing and to furnish EIPD with a copy of the same. Likewise, EIPD was period from receipt thereof. Both parties were directed to attach all the necessary documents to substantiate their respective claims. Both parties appeared through their respective counsels. On 07 October 2019. an Order was issued in relation to the 03 October 2019 hearing directing 9F directed to file its comment/opposition to 9F's position paper within the same On 03 October 2019, a clarificatory hearing was conducted by the OGC.

advertisement or online lending platforms". also admitted that it initially failed to comply with the directive of the companies to disclose in their online lending platforms the "corporate name, SEC Registration Number, and Certificate of Authority to Operate a Financing/Lending Company Number in a conspicuous portion of their it reiterated its allegations in its Motion to Lift dated 20 September 2019. 9F Commission in SEC Memorandum Circular No. 19, which required lending On 10 October 2019, 9F filed its position paper of the same date where

appropriate penalties imposed for violating the same. that it will file the necessary attachments thereto, intends to comply with the provisions set forth in SEC Mernorandum Circular No. 19, and pay the compiying with the requirements of SEC Memorandum Circular No. 19 alleging that its "Quick Peso" Online Lending Platform now substantially complies with the provisions of Memorandum Circular No. 19, i.e., it already indicates 9F's corporate name in its website to inform its prospective borrowers that it is a duly registered and authorized entity. 9F also manifested Likewise, 9F however manifested that it is now in the process of

to the amendment of its Articles of Incorporation may take four (4) to six (6) Extension on Submission of Requirements praying that it be given sufficient time to submit the same considering that one of the requirement which relates Weeks. On 11 October 2019, 9F, however, filed a Motion for Request of

1o ibid., Note 3

SEC En Banc Case No. 09-19-054 In the matier of: Quickpeso, Mowr Tage S of tt For: Motion to Lin Ce Wi Ordc

Comment on the Motion for Extension to Submit Requirements within five (5) days from receipt of the same. On 14 October 2019, an Order was issued directing EIPD to file its

for the SEC to properly monitor its operations for regulatory purposes and to a virtual office of the lending company. Consistent with the policy on full disclosure and the principle of transparency, licensed lending company should properly identify itself as the operator of a particular online lending application in order for the public to know the entity they are dealing with and ensure that the public is not defrauded. company using such lending application as it would be doing business under the operator(s) of such online lending application as it practically constitutes Commission as part of its company name if it intends to operate as a lending said name or style. The foregoing will enable the SEC, as a regulator, to know Order dated 24 October 2019 argued that the online iending application being used by a licensed lending company should be registered with the EIPD in its Comment/Opposition to the Motion to Lift Cease and Desist

the Truth in Lending Act, Data Privacy Act, Unfair Collection Practices Rules and Regulations, and other relevant laws, rules and regulations. in operating an online lending application whose ownership cannot be determined or identified would likely cause significant injury to the public in a way that such lending application(s) could be used to commit violations of EIPD also manifested that the continued practice of a lending company

DISCUSSION

We find the Motion unmeritorious.

terms and conditions, misrepresented on the waiver of loan charges and fees, and the apparent violation of the right to privacy which subjected their debtors and/or complainants to public humiliation and ridicule. Operators, including Quick Peso which is operated by 9F committed and Desist Order dated 12 September 2019 are the numerous complaints received by the CGFD and EIPD from the public alleging that Online Lending unreasonable and abusive lending and collection practices, imposed and charged high interest rates, unilaterally implemented onerous and irrational It bears emphasis that one of the grounds for the issuance of the Cease

of 2019, otherwise known as the Prohibition on Unfair Debt Collection On this note, Section I of SEC Memorandum Circular No. 18, Series

SEC En Banc Case No. 09-19-0s4 In the matter of. Quickpeso. Movant For: Motion to Lift Ceasc Page & of 11 sist Orde

Practices of Financing Companies (FC) and Lending Companies (LC), provides:

shall constitute unfair collection practices, which shall be subject to the penalties provided herein: and performance of their duties, they must observe good faith and reasonable conduct and refrain from engaging in unscrupulous and untoward acts. Without limiting the general application of the foregoing, the following conduct loan agreement, provided that, in the exercise of their rights TPSPs hired by them may resort to all reasonable and legally permissible means to collect amounts due them under the "SEC. 1. Unfair Colleetion Practices. -- FCs, LCs, and

A The use or threat of use of violence or other criminal means to harm the physical person .renutation..or property of any person:

b. The use of threats. to take any action that cannot legally be taken:

C The use of obscenities..insults..or profane language the_natural consequence of which is to_abuse the borrower and/or which amount to a criminal act or offense under applicable laws:

Disclosure or.publication..of the names.and_.other Dersonal information..of borrowers who allegedly refused to pay debts, except as may be allowed under Section 2 hereof:

C Communicating or. threatening to communicate to

any .person .iloan .information...which .is..known..or except as may be allowed under Section 2 hereof: which should be known, to be false, including the failure to communicate that the debt is being disputed,

f. The use of any false representation_or deceptive obtain information concerning a borrower; means to colleet or attempt to collect any debt or to

g Making contact at unreasonable/inconvenient times reasonable or convenient opportunities for contact. for more than fifteen (15) days, or the borrower has given express consent that the said times are the only or hours. which shall be defined a contact before 6:00 A.M or after 10:00 P.M., unless the account is past due

during, or after the execution of the loan agreement. Such consent which shall be evidenced by written. electronic or recorded means, may be given prior to,

Page 7 of 11 For Motion to Lifl Cease and Desist Order CEn BcNo.09-1905 r

Notwithstanding the borrower's consent..contacting the persons in the borrower's contact list other than those who wcre named as guarantors or co-makers shall also constitute unfair debt collection practices.j (Emphasis supplied)

Section 2 of the same Memorandum Circular, provides:

"SEC. 2. Confidentiality of Information. For

confidential that data of the borrower." purposes of collection, FCs and LCs shall keepstrictly XXX XXX XXX.

(Emphasis supplied)

Peso" in providing loan services to the public. Nothing in its position would practices. 9F relied solely on the argument that it is an entity duly registered with and authorized by the Commission to operate as a lending company, and evidently show that 9F disprove or deny the commission of unfair debt collection practices under the above-quoted provisions. to refute allegations that it has not committed any unfair debt collection for which reason, it can validly use its mobile lending application "Quick A careful review of the evidence submitted by 9F reveals that it failed

authority to operate and maintain an unregistered online lending application is misplaced and devoid of legal basis. 9F's reliance on its Certificate of Authority as containing a grant of

Financing Companies and Lending Companies and Reporting of Online Lending Platforms, provides: otherwise known as the Disclosure Requirements on Advertisements of Section 1 of SEC Memorandum Circular No. 19, Series of 2019

Platforms the following: "SEC. 1. Required Disclosures. -- FCs and LCs shall fully disclose in their Advertisements and Online Lending

Corporate Name...SEC. .Registration. .Number and conspicuous...portionof their..Advertisements..and Financing/Lending..Company(CA) Number ina Online Lending Platforms: and Certificate.. of .Aut hority. Ie Operate.

B An advisory for their prospective borrowers to study the terms and conditions in the Disclosure Statement

For: Motion to Lift Cease and Desist Orde SEC Er Danc Case No. 09 19-0$4 Pac8of11 In the matter ot. Quickpeso, Mowan

(Emphasis supplied) before...proceeding..with..the..loan..transaction..

No. 19, Series of 2019 constitutes misrepresentation as it effectively deprived its borrowers important information relating to its Corporate Name, SEC advertisements and Online Lending Platforms. Registration and Certificate of Authority to Operate Numbers in its 9F's refusal and/or failure to comply with SEC Memorandum Circular

were informed of the terms and conditions and the disclosure or privacy Implementing Rules and Regulations of Republic Act No. 9474, provides: statement before proceeding with the loan transaction. Rule 6(b) of the Moreover, nothing in the records of this case show that 9F's borrowers

"Rule 6. Amount and Charges on Loans

XXX XXX XXX

the consummation of the transaction, a lending company shall furnish cach debtor a disclosure statement, setting forth to the extent applicable, the following information: (b) In accordance with the Truth in Lending Act and prior to

Ix I IN Vi V V Vi * Notarial fee: All other fees in connection with the loan transaction;P Description of the coliection and lien enforcement Method of calculating the total amount of obligation in case of default." (Emphasis supplied) Rate of interest of the loan: Service or processing fee, if any: Any penalty charge for late amortization payment: Collection fee, if any: The principal amount of loan; procedures: and Amortization schedule:

carried with it a grant of authority to establish and operate an online lending specifically in the context of its position that its Certificate of Authority Regulation Act of 2007"1, its Implementing Rules and Regulations, application. Memorandum Circular No. 19, Series of 2019 and the Lending Company The foregoing shows that 9F deliberately violated both the SEC

without prior approval of the Commission, it also committed serious Thus, when 9F established and operated Quick Peso online application

1 Republic Act No. 9474

Page 9 of 1t For: Motion to Lif Cease and Desist Order SEC En Bane Case No. 09-19-054 In the matier ot. Qnickpeso, Mowmt

grave that it warrants the suspension or revocation of the Certificate prejudice of or damage to the general public.12 Such misrepresentation is so Registration of a corporation. misrepresentation as to what the corporation can do or is doing to the great

Section 3 of the same SEC Memorandum Circular, provides:

timited to the following information: Department (CGFD) of the Commission an Affidavit_of Lending Platforms, within ten (10) days from the cffectivity of this Circular. Said report shall include, but shall not be submit to the: Corporate Governance and Finance Compliance(SEC.Form..Existing Online...Lending Platforms) containing a report of all their existing Online *SEC. 3. Report to the Commission. -- FCs and LCs shall

1 Name of Online Lending Platform/s:

3 Proof of compliance with Section 2 hereof : Images of the Online Lending Platform/s as they appear

O Illustrations of the Online Lending Platforms showing to the public; and

displayed." how the required Disclosure and Advisory are

XXX XXX XXX

2019. On the basis of the foregoing. 9F 's argument that its authority to operate and maintain "Quick Peso" emanates from its Certificate of Authority and should be sustained, must fail. complied with the provisions of Memorandum Circular No. 19, Series of The records of the Commission reveal that to date, 9F has not yet

to ensure that acts and/or activities violative of the said laws are immediately stopped. empowered to implement the provisions of, and to impose administrative sanctions for violations of Lending Company Regulation Act of 2007, its special laws, the Commission is authorized to issue Cease and Desist Orders Implementing Rules and Regulations, SEC Memorandum Circulars, and other Being the administrative and regulatory agency authorized and

received relating to the abusive means of collecting the amount due from their debtors has issued a number of CDOs to put an end to the unfair debt In fact, the Commission, by reason of the numerous complaints it has

12 Sec. 6(i)[2] of Presidential Decree no. 902-A

Page 10 of 11 For: Motion to Lift Cease and Desist Order SEC En Banc Crse No. 09-19-054 In the maer of Quickpeso, Movant

collection practices which are expressly prohibited under SEC Memorandum Circular No. 18, Series of 2019

Section 156, paragraph l of the Revised Corporation Code, 13 provides.

such...person..to.desist.from...committing..the..act Commission has reasonable basis to believe that a person has..violated...or..is .about to .violate..this Codc....rule. regulation..or. order of the Commission. .it may direct "SEC. 156. Cease aud Desist Orders. -- Whenever the constituting the violation."

XXX XXX XXX

(Emphasis supplied)

Desist Order filed by 9F Lending Philippines Incorporated is hereby DENIED for lack of merit. The CEASE AND DESIST ORDER issued against Quick Peso is hereby MADE PERMANENT. WHEREFORE, premises considered, the Motion to Lift Cease and

and published in a national newspaper of general circulation and furnished to and appropriate action. all operating departments and offices of the Commission for their information Let a copy of this Resolution be posted in the Commission's website:

collection practice of 9F and if necessary impose additional penalties, as applicable. Further, the CGFD is hereby directed to investigate the unfair debt

SO ORDERED Pasay City, 29 October 2019.

t3 Republic Act No. I1232

In the mater of. Quiekpeso, Movant For: Motion to Lin Cease and Desist Order SEC En Banc Cuse No. 09-19-054 Page 11 of t!

EMHLIbBI AQUINO Chairberson A

EPHYRO LUIS B. AMATONG Commissioner JAVEY PAUL D. FRANCISCO Commissioner

KELVINLESTER K. LEE Commissioner KARLO S. BELLO * Commissioner

*On Official Business