FERNANDO JOQUICO SANTOS

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

INTHEMATTEROF FERNANDO JOQUICO SANTOS

ENFORCEMENT AND INVESTOR SEC CDO Case No.01-25-117 PROTECTION DEPARTMENT, Movant. X

20 February 2025 TO: FERNANDO JOQUICO SANTOS San Juan 1500 1 J.De Mesa St., Brgy.Little Baguio PROTECTION DEPARTMENT Securities and Exchange Commission 9th Floor,SEC Headquarters 7907 Makati Ave.,Salcedo Village, ENFORCEMENT AND INVESTOR Bel-Air,Makati City1209 COMPANY REGISTRATION AND MONITORING DEPARTMENT Securities and Exchange Commission 5th Floor,SEC Headquarters 7907 Makati Ave., Salcedo Village, Bel-AirMakati City,1209 Securities and Exchange Commission 17th Floor,SEC Headquarters, Bel-Air,Makati City1209 MARKETS AND SECURITIES REGULATION DEPARTMENT 7907 Makati Ave., Salcedo Village

8th Floor,SEC Headquarters Bel-Air,Makati City,1209 CORPORATE GOVERNANCE AND FINANCE DEPARTMENT Securities and Exchange Commission 7907 Makati Ave.,Salcedo Village BANGKO SENTRAL NG PILIPINAS A.Mabini St., cor. P. Ocampo St. Office of the General Counsel and Legal Services Malate,Manila Securities and Exchange Commission INFORMATION AND COMMUNICATIONS TECHNOLOGY DEPARTMENT 3rd Floor,SEC Headquarters, 7907 Makati Ave., Salcedo Village, DEPARTMENT OF TRADE AND INDUSTRY Legal Department Trade and Industry Building. 361 Sen. Gil Puyat Avenue,Makati City Bel-AirMakati City1209

Pasay City NATIONAL PRIVACY COMMISSION 5th Floor,Delegation Building, PICC Complex,Roxas Boulevard Legal Division C.P. Garcia Avenue, Diliman DEPARTMENT OF INFORMATION AND COMMUNICATIONS TECHNOLOGY Legal Department Quezon City

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

IN THE MATTER OF FERNANDO JOQUICO SANTOS

Promulgated: 18 February 2025 SEC CDO Case No.01-25-117

PROTECTION DEPARTMENT, ENFORCEMENT AND INVESTOR Movant.

CEASEANDDESISTORDER

persons acting for and in his behalf (the "Agents"), to immediately cease and desist from engaging in lending activities as they are not registered required under the Lending Company Regulation Act (LCRA). Investor Protection Department (EIPD) of even date,praying that a Cease and Desist Order (CDO be issued directing FERNANDO JOQUICO SANTOS ("Mr. Santos"), his agents,representatives, promoters and all as a corporation,and have no license to operate as such,which are both dated 15 January 2025 (the "Motion") filed by the Enforcement and This resolves the Motion for the Issuance of a Cease and Desist Order

RELEVANT FACTS

activities/business of Mr. Santos resulted from his filing before the OCP Commission, seeking the latter's assistance in determining whether Mr. Santos has been granted the authority to engage in lending activities. The inquiry by the OCP San Juan on the legitimacy of the lending by the Office of the City Prosecutor,San Juan City (OCP San Juan) to the clients/borrowers for the past two years.2 San Juan of numerous cases for violation of BP 22 against his The filing of the present Motion was prompted by the letters sent

Lending Applications3 of the EIPD (the "EIPD Task Force") conducted a Acting on the letters of the OCP San Juan, the Task Force on Online

proliferation ofthe Online Lending Companies engaged in to lending activities with unexplainable high 3 Task Force on Online Lending Applications was created bythe.Commission to investigate the 1 Dated 07 September 2023 and 16 September 2024. EIPD's Motion AnnexesAA-1

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formal investigation on the lending activities of Mr.Santos for possible violation of Republic Act No.9474 or the Lending Company Regulation Act of 2007, which the Commission is mandated to administer and implement.

License Office (BPLO) of San Juan City whether there is any business registered business under such name.5 registered under the name of Fernando J. Santos. The BPLO issued a Certification attesting to the fact that based on its records, there is no The EIPD Task Force verified with the Business Permits and

obtained copies of the complaints filed by Mr. Santos with the OCP San Juan for violation BP22 against his borrowers,for bounced checks issued by the latter as payment for loans obtained from him. The Complaints showed that Mr. Santos has been conducting lending activities since 2018, and has been extending loans to the public in amounts ranging from PHP 30,000.00 -PHP 600,000.00. In the course of the investigation, the EIPD Task Force also

subjects of the criminal cases for BP 22 filed by Mr. Santos.8 The affiants of Mr. Santos,the EIPD Task Force submitted in evidence the Complaint become an agent or middleman where they will earn between 2%-3% start of every transaction before the release of the loan proceeds. The copies of the daily reports showing the remittance payments made to Mr. Affidavits? of former agents of Mr. Santos who subsequently became declared in their respective affidavits that Mr. Santos offered them to commission per loan transaction.They were required by Mr. Santos to full amount of every loan they secure;and (b) to sign a blank paper at the Santos were attached to the Complaint Affidavits. a) each open a checking account,and to make a guarantee check for the In support of its allegations of the unauthorized lending activities

interest rate, unilaterally implementation of onerous and unreasonable terms and conditions, make 5 Motion, par. 7 and Annex "D" OCP San Juan -Criminal Complaint Forms with Docket Nos. INV-22G-00553; INV-22G-00528; INV misrepresentations as to non-collection of charges and fees and violate the rights to privacy of the debtors. 22E-00424; INV-23G-00812; INV-24B-00077; INV-23G-00770; INV-22K-01087; INV-23A-00038; INV- 23B-00127; INV-22E-00415; INV-22E-00398; INV-22E-00401; INV-22E-00400; INV-22E-00425; INV- 22H-00684; INV-22H-00693; INV-21J-1187; INV-22H-00648; and INV-22C-00251 8 Ibid, par. 9. EIPD's MotionAnnexC 7 Motion. See AnnexFto F-1 SECOGC

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investigator who executed and issued an affidavit which was submitted The foregoing was confirmed and attested to by the EIPD

in evidence.

Finally,in support of its allegation that Mr. Santos has not caused the registration of a corporation that will carry out a lending business by the Company Registration and Monitoring Department (CRMD) and and has secured a Certificate of Authority from the Commission,both of which are required under the Lending Company Regulation Act of 2007 EIPD Task Force submitted in evidence the negative Certifications issued Financing and Lending Companies Department (FLCD.io

ISSUE

Task Force warrant the issuance of a CDO against Mr. Santos. Whether the allegations and the evidence presented by the EIPD

RULING

The Motion is impressed with merit.

engaged in the business of offering and providing loans to the public, and/or is carrying out transactions proper to a lending company, without the requisite Certificate of Authority issued by the Commission. allegations of the EIPD that Mr.Santos,not being a corporation,is actually The pieces of evidence presented sufficiently support the

the Securities Regulation Code (SRC) grants the Commission the power and authority to implement and enforce not only the provisions of the SRC,but also the laws administered and implemented by it. In this regard Section 5.1a of the SRC provides: At the outset,it must be emphasized that Republic Act No.8799 or

Section 5. Powers and Functions of the Commission - 5.1. The Commission shall act with transparency and shall have the powers the Corporation Code, the Investment Houses law, the Financing Company Act and other existing laws. Pursuant thereto the and functions provided by this code,Presidential Decree No.902-A

Ibid. See Annex "C". Io Ibid. See Annex "E" SEC-OGC

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Commission shall have, among others, the following powers and functions:

(d Regulate,investigate or supervise the activities

of persons to ensure compliance;

XXX XXX XXX

Issue cease and desist orders to prevent fraud or injury to the investing public;

(n laws."(Emphasis and underscoring supplied) Exercise such other powers as may be provided by law as well as those which may be implied from,or which are necessary or incidental to the carrying to achieve the objectives and purpose of these out of,the express powers granted the Commission

investigate the activities of persons, both juridical and natural, to Commission has the express power and authority to regulate and ensure compliance with the provisions of the laws administered or implemented by it. Thus, if a person commits an act that constitutes a violation (or will result in a violation) of the laws implemented by it,the authority, including the issuance of a cease and desist order, to ensure, among others, that the investing public and/or consumers are not Commission is duty bound to promptly exercise the said power and It is clear from the afore-quoted provision of the SRC that the

defrauded or injured

is Lending Company Regulation Act of 2007 (LCRA),which categorically provides in Sections 3 and 4 that only a"lending company"which must be a corporation, and has secured a Certificate of Authority from the Commission can validly and lawfully carry out a lending business, to Wit: Among the laws that the Commission is mandated to implement

Sec.3.Definition of Terms.-For the purposes of implementing this Act,the following definitions shall apply

( LENDING COMPANY shall refer to a corporation banking institutions, investment houses, savings and engaged in granting loans from its own capital funds or from funds sourced from not more than nineteen loans associations, financing companies, pawnshops, institutions already regulated by law The term shall be synonymous with lending investors 19) persons. It shall not be deemed to include insurance companies, cooperatives and other credit SECOGC

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SEC. 4.Form of Organization.- A lending company shall be established only as a corporation:Provided That existing lending

disallowed from engaging in the business of granting loans to the public one year after the date of effectivity of this Act. investors organized as single proprietorships or partnerships shall be

No lending company shall conduct business unless granted an authority to operate by the SEC.(Emphasis and underscoring supplied

to effectively prevent and mitigate the commission of practices State to regulate the establishment and operations of lending companies Relative thereto,Section 2 of the LCRA lays down the policy of the

prejudicial to public interest, thus:

SEC.2.Declaration of Policy.-It is hereby declared the policy of the their operation on a sound, efficient and stable condition to derive the prevent and mitigate, as far as practicable, practices prejudicial to standards under which they may be established and do business. State to regulate the establishment of lending companies and to place optimum advantages from them as an additional source of credit; to public interest; and to lay down the minimum requirements and

regulatory requirements and stand to be fully accountable/liable for any violation of its provisions, including its implementing rules and without being a corporation and/or without license. In this regard, regulations. In a similar vein, the LCRA provides an assurance to the registered lending companies are presumed to be fully compliant with all public that persons/entities that operate a lending business without the required license are not exempt from the regulatory watch of the Commission,and from assuming the appropriate penalties for operating Section 12 of the LCRA specifically provides,in part,thus: Through the LCRA, the public is afforded ample protection as all

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

Y from the SEC. (Emphasis supplied) Any person who shall engage in the business of a lending company without a validly subsisting authority to operate

show that Mr. Santos is clearly engaged in the business of extending loan In the instant case,the evidence presented by the EIPD Task Force SEC-OGC

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to the public on a regular basis since 2018, thus acting as a lending company without being a registered corporation, and the requisite certificate of authority from the Commission in violation of the LCRA.

The high volume of lending transactions and the substantial

risk of losses by compelling his agents/middlemen to act as guarantors continuously engage in the business of lending for profit. The lending business conducted by Mr. Santos is made even more apparent by his monitor/report loan balances,and ensure the collection of the said loans Mr. Santos also implemented a system intended to effectively manage of his borrowers. amount of loans involved,undoubtedly reveals Mr. Santos intention to employment of agents/middlemen to secure/offer loans to the public,

is affirmed by the certifications issued by the FLCD and CRMD.The which warrants the immediate issuance of a cease and desist order to immediately prevent an illegal act, and to protect the public from Mr Santos'fraudulent business activity i.e.misrepresenting to the public that he has the license to operate a lending business.This absence of authority issuance of a cease and desist order without prejudice to the institution of the appropriate criminal action for violation of the LCRA. The foregoing clearly constitutes a clear violation of the LCRA against Mr.Santos is however

SANTOS, his operators, promoters, representatives, agents AND ANY are hereby 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 AND ALL PERSONS CLAIMING AND ACTING FOR AND IN HIS BEHALE this Commission the requisite Certificate of Incorporation and Certificate of Authority to Operate as Lending Companies or Financing Companies WHEREFORE,premisesconsidered,FERNANDOJOQUICO

from offering and advertising their lending business through the internet or any other media,and to delete/remove any and all materials involving representatives, agents AND ANY AND ALL PERSONS CLAIMING AND ACTING FORAND IN HIS BEHALF,are DIRECTED to CEASE AND DESIST or covering the same. FERNANDO JOQUICO SANTOS, his operators, promoters,

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The EIPD of the Commission is hereby DIRECTED to cause the posting of this Cease and Desist Order in the Commission's website considering that Fernando Joquico Santos is not a registered entity

The EIPD is FURTHER DIRECTED to submit a formal compliance report,by way of a pleading,to the Commission En Banc within ten (10 days from receipt of this Cease and Desist Order.

and Monitoring Department, Markets and Securities Regulation Department, Corporate Governance and Finance Department and the Let a copy of this Order be furnished to the Company Registration

and Industry, the National Privacy Commission, the Department of Information and Communications Technology, and the relevant local Information and Communications Technology Department of this Commission, the Bangko Sentral ng Pilipinas, the Department of Trade

government unit(s) for their information and appropriate action.

to lift thereof within five (5 days from the date of its posting or 4-3Rule IV,Part II of the 2016 Rules of Procedure of the Commission,the parties subject of the Cease and Desist Order may file a Verified Motion publication. In accordance with the provisions of Sec.64.311 of the SRC and Sec.

FAILNOTUNDER PENALTY OF LAW

SO ORDERED.

Makati CityPhilippines

EMILIO B.AQUINO** Chairperson

11 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 resolve the request within the time herein prescribed, the cease and desist order shall automatical be lifted. made not later than ten 10 days from the termination of the hearing.If the Commission fails to SEC-OGC

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KLSLML

JAVEY PAUL D.FRANCISCO Gommissioner KARLO S.BELLO Commissioner

MCJILL BRYANT T.FERNANDE Commissioner ROGELIOV.QUEVEDO* Commissioner

**On Official Business *Abstain

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