SEC EB Case No. 08-19-460RAMONA FAVIS-VELASCO AND ELVIRA L. YULO, Appellant, v. ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT AND JAYE MARJORIE ROJAS-GONZALES, Appellee.

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

RAMONA FAVIS-VELASCO AND ELVIRA L.YULO,

Appellants, SEC En Banc Case No. 08-19-460

Violation of Section 28 of the Securities Regulation Code - versus

ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT AND JAYE MARJORIE ROJAS- GONZALES, Appellees.

DECISION

Before the Commission En Banc is the Appeal dated 7 August 2019 filed on 9 August 2019 by Ramona Favis-Velasco and Elvira L. Yulo Appellants)assailing the Order of the Enforcement and Investor Protection

the Appellants against Jaye Marjorie Rojas-Gonzales(Appellee)for alleged violation of Section 28 of the Securities Regulation Code (SRC) Department (EIPD) dated 28 May 2019 which dismissed the Complaint of

PARTIES

represented in this case by Cruz Enverga and Lucero Law Offices. Tordesillas Street, Salcedo Village, Makati City, respectively. Appellants are are both of legal age, Filipinos and residents of 20 San Felipe Street. Magallanes Village, Makati City, and Unit A1903 Three Salcedo Place Appellants,Ramona Favis-Velasco and Elvira Yulo (theAppellants

Law Offices. Filipino and a resident of 1 Thyme corner Rosemary Street, Mahogany Place 3, Taguig City.' Appellee is represented in this case by Mendoza and Pangan Appellee, Jaye Marjorie R.Gonzales (theAppellee) is of legal age

I Par. 1.1 of the Answer dated 11 June 2015

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RELEVANT FACTS

Appellants informed a common friend, a certain Marianne Onate (Ms.

introduce them to her broker. Ms. Onate introduced Appellants to Appellee who allegedly represented herself to be a stock broker who can handle their Onate), of their desire to invest in the stock market and asked the latter to

Stock Exchange (the Exchange") through B.A. Securities, Inc. (BASI). investments relating to the buying and selling of securities in the Philippine

allegedly settled through checks issued to BASI, to wit: funds by buying and selling stock in the Exchange through Appellee who placed/traded the same using her own account. All their purchases were Consequently, sometime in 2008, Appellants started investing their

a. 9 May 2008-payment of P200,086.40 for the purchase of 35,000

b. 8 October 2008 - payment of P1,487,537.50 for the purchase of c.12 November 2008 - payment of P801,757.50 for the purchase of Petron Corporation (PCOR) shares;4 250,000 PCOR shares;5

d. 18 November 2008 - payment of P262,210.00 for the purchase of e. 300,000 DMCI Holdings,Inc.DMCI) shares; 19 November 2008 - payment of P993,372.50 for the purchase of 100,000 DMCI shares;

f. 24 November 2008 - payment of P232,293.60 for the purchase of 200,000 PCOR shares;8

g. 26 November 2008 - payment of P105,558.00 for the purchase of h.4 June 2009 - payment of P176,228.75 for the purchase of 5,000 I 50,000 DMCI Holdings, Inc. (DMCI) shares;10 22 June 2009 - payment of P188,803.13 for the purchase of 50,000 BDO shares;11 100,000 DMCI shares;

j.23 June 2009 - payment of P114,790.80 for the purchase of 30,000 EDC shares;12 EDC shares;

1 Par.2.6.13 of the Complaint 2 See Par. 9 of the Appeal and Par. 2.1 of the Complaint 4 Par. 2.6.1 of the Complaint Par. 2.6.6 of the Complaint 13 Par. 2.6.15 of the Complaint 5 Par. 2.6.3 of the Complaint 6 Par. 2.6.5 of the Complaint Par. 2.6.7 of the Complaint Par. 2.6.9 of the Complaint 1 Par.2.6.10 of the Complaint 12 Par.2.6.14 of the Complaint 3Par.11 of the Appeal Memorandum

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9 and 10 July 2009 - payment of P100,595.00,P51,255.40, and 350,000 BPC shares;14 P474.808.40 respectively. for the purchase of an aggregate of

dated 3 November 2009, that from then on, all transactions covering their However, sometime in 2009, Appellee, informed Appellants in a letter

investments will be handled by D.A. Market Securities,Inc.DAMSI, of which she claimed to be part owner. Appellee then directed Appellants to stop issuing checks to BASI.15 On account thereof, Appellants thereafter bought and sold stocks in the Exchange through Appellee who placed/traded the same using her own account with DAMSI. Appellantspurchases were settled through checks issued to DAMSI, to wit:

a.4 November 2009 - payment of P129,906.53 for the purchase of (i)

b.21-23 December 2009-payment of P580,197.90 for the purchase of shares, and (iv) 100,000 SMDC shares;16 50,000 SMDC shares,(ii 242,000 ALI shares,(iii) 5,000 BDO 1,260,000 ACR shares;17

e.31 May 2010 -payment of P3,123.68 for the balance/difference of c. 7 January 2010 - payment of P816,665.50 for the purchase of d. 7 January 2010 - payment of P122,725.90 for the purchase of 700,000 SMDC shares:18 100,000 ACR shares:19

Appellant Velasco's (i sale of a total of 1,600,000 ACR shares,(ii)

f shares;20 26 August 2010-payment of P5,075,867.36 by Appellant Yulo for purchase of 30,000 ALI shares, and (iii) purchase of 36,000 DMCI

the purchase of(i 1,000,000 EDC shares, and ii 17,000 AP shares:21 g.2 September 2010 --payment of P306,690.40 by Appellant Yulo for h. 29 October 2010 - payment of P650,621.84 to cover the balance of i.12 January 2011 - payment of P697,626.33 for the purchase of the purchase of 160,000 Megaworld shares;22 the ALI shares;23 20,000 DMCI shares;24 the purchase of the DMCI shares less the proceeds from the sale of

20 Par. 2.6.31 of the Complaint and Par. 16.31 of the Appeal 21 Par. 2.6.52 of the Complaint 22 Par. 2.6.53 of the Complaint 23 Par. 2.6.32 of the Complaint and Par. 16.32 of the Appeal 24 Par. 2.6.33 of the Complaint 14 Pars. 2.6.16 to 2.6.18 of the Complaint 15 Par. 13 of the Appeal and Par. 2.2 of the Complaint 16 Pars. 2.6.23 and 2.6.24 of the Complaint 17 Pars. 2.6.25 to 2.6.28 of the Complaint 18 Par. 2.6.29 of the Complaint 19 Par. 2.6.30 of the Complaint

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k. 15 May 2012 - payment of P62,104.63 for the following j.17 January 2011 -- payment of P274,624,626.33 for the purchase of 10,000 AP shares;23

l. 4 and 7 June 2012-payment of P233,865.65 and P321,518.04 for 21,000 DMCI shares;26 transactions: (i) sale of 180,000 SMDC shares; and (ii) purchase of

the purchase of a total of 8,000 DMCI shares;27

Appellants purchases that were settled through wire transfers/deposit made to DAMSI under the same arrangement i.e. the use of Appellee's own account with DAMSI, are as follows:

a. 4 February 2011 - payment of P992,444.09 representing the b. 17 February 2011 - payment of P212,161.16 for the purchase of (i) f.19, 21 and 27 December 2011 - aggregate payment of P314,057.59 c. 26 April 2011 - payment of P330,993.00 for the purchase of 3,000 d. 12 December - payment of P101,511.02 for the (i) sale of 39,000 e. 12 December - payment of P101,511.02 for the (i sale of 39,000 remaining balance of the purchase price of 311,111 SMDC shares;28 3,000 DMCI shares, and (ii) 4,000 AP shares;29 SMC shares ;30 ALI shares, and (ii) purchase of 150,000 LPZ shares;31 ALI shares, and (ii) purchase of 150,000 LPZ shares;32 for the purchase of 60,000 LPZ shares;33

showing the summary of the stocks they own as of statement date and the amount that Appellee charged as "broker's commissions to wit: Appellee allegedly issued Statements of Account (SOAs) to Appellants

b. Statement of Account as of 6 October 200835. c. Statement of Account as of 5 November 200836: d. Statement of Account as of 7 November 200837 e. Statement of Account as of 13 November 200838: a.Statement of Account as of 7 May 200834.

25 Par. 2.6.34 of the Complaint 26 Par. 2.6.45 of the Complaint 27 Pars. 2.6.46 and 2.6.47 of the Complaint 32 Par. 2.6.39 of the Complaint 33 Pars.2.6.40-2.6.42 of the Complaint 34 See AnnexF-1of the Appeal 35 See AnnexH-1of the Appeal 28 Par. 2.6.35 of the Complaint 29 Par. 2.6.36 of the Complaint 31 Par.2.6.39 of the Complaint 36 See Annex "I-1" of the Appeal 38 See AnnexK-1of the Appeal 30 Par. 2.6.37 of the Complaint 37 See AnnexJ-1of the Appea

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f.Statement of Account as of 14 November 200839.

g. Statement of Account as of 18 November 2008407 h. Statement of Account as of 19 November 200841; I Statement of Account as of 21 November 200842. 1 Statement of Account as of 12 January 200943. k. Statement of Account as of 27 March 200944

Statement of Account as of 3 June 200945. m. Statement of Account as of 17 June 200946. n Statement of Account as of 18 June 200947: O. Statement of Account as of 6 July 200948 p. q. I Statement of Account as of 7 July 200949 Statement of Account as of 13 July 200950: Statement of Account as of 8 July 200951: S Statement of Account as of 20 and 22 July 200952:

u Statement of Account as of 29 and 30 October 200953. Statement of Account as of 21 December 200954: V Statement of Account as of 21 December 200955 w. Statement of Account as of 4 January 201056: X Statement of Account as of 18, 19, 20, 21, 24, 27 and 31 May 201057;

cc. Statement of Account as of 15 July 201162; dd.Statements of Account as of 18 July 201163: ee. Statements of Account as of 7 and 8 December 201164 aa. Statement of Account as of 14 February 201160. bb.Statement of Account as of 26 April 201161: y Z Statement of Account as of 13 January 201159 Statement of Account as of 26 October 201058.

58 See AnnexII-3 of the Appeal 60 See Annex MM-3 of the Appeal 61 See Annex NN-3of the Appeal 62 See AnnexOOof the Appeal 3See AnnexPPandPP-1of the Appeal 64 See AnnexQQ-3of the Appeal 39 See Annex "L-1" of the Appeal 41 See AnnexN-1of the Appeal 42 See AnnexO-1of the Appeal 43 See AnnexP-1of the Appeal 44 See Annex Q of the Appeal 45 See AnnexR-1of the Appeal 4 See Annex "S-1of the Appeal 47 See AnnexT-1of the Appeal 49 See AnnexV-1of the Appeal 50 See Annex W-1 of the Appeal 51 See Annex X-1 of the Appeal $2 See Annex Y of the Appeal 53 See Annex BB-1 of the Appeal 54 See AnnexCCof the Appeal 55 See Annex DDof the Appeal 56 See AnnexGG-1of the Appeal 57 See AnnexHH-1 of the Appeal 59 See Annex KK-1" of the Appeal 40 See Annex "M-1" of the Appeal 48 See AnnexU-1of the Appeal

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ff. Statement of Account as of 14 December 201165. gg.Statement of Account as of 16 December 201166. hh.Statement of Account as of 23 December 201167.

I1. Statement of Account as of 8, 10, 14, 15, 30 and 31 May 201271; jj. Statement of Account as of 9 March 201269. kk.Statement of Account as of 10, 12 and 13 April 201270. mm. Statement of Account as of 4 and 5 June 201272: nn.Statement of Account as of 1 August 201273: 0o.Statement of Account as of 12 October 201274: and pp.Statement of Account as of 7 and 8 January 201375. ii. Statement of Account as of 4 January 201268

payable to Appellant Yulo in the amount of P6,950,000.00, pursuant to the Early in 2013,Appellee issued BDO Check dated 17 January 2013

latter's instruction to liquidate her EDC shares. However, it was alleged that

that it was Drawn against Insufficient Funds (DAIF).7 On the other hand. the check was dishonored when it was presented for payment for the reason

certain shares i.e. SMDC, Bloomberry, GT Capital, DMCI.77 into actual certificate of stocks, and to pay her the proceeds of the sale of Appellant Velasco directed Appellee to convert her outstanding stock position

Appellants then discovered after their visit at the DAMSI office that Appellee was not a part owner of the corporation, contrary to her representation, and was all the while buying and selling securities for her own account using their money. Appellants likewise discovered that they did not

Were all deposited/credited in Appellee's account with DAMSI.78 have accounts with DAMSI, and that the checks that were issued to DAMSI

Appellee's alleged failure to comply with Appellants' demands for payment of their demandable obligation and/or surrender of their stock

Investor Protection Department (EIPD on 19 May 2014 (the Complaint certificates resulted in the filing of the Complaint with the Enforcement and

against Appellee for violation of Section 28.1 in relation to Section 73 of the Securities Regulation Code (SRC).

6 See AnnexRR-2of the Appeal 69See AnnexWWof the Appeal 74 See Annex BBBof the Appeal 7 Par. 2.7.1 of the Complaint and Pars. 17 and 18 of the Appeal 17 Par. 2.7.2 of the Complaint and Par. 19 of the Appeal 78 Par. 21 of the Appeal 66 See Annex "SS-2 of the Appeal 67 See Annex "TT-2 of the Appeal 68 See AnnexUUof the Appeal 70 See AnnexWW-2of the Appeal 73 See AnnexAAA-1of the Appeal 75 See AnnexCCCof the Appeal 71See AnnexXX-1andYY-1of the Appeal 72 See AnnexZZ-3of the Appeal

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On 15 June 2015,Appellee filed her Answer dated 11 June 2015 praying for the dismissal of the Complaint for alleged lack of merit. Appellee maintained that she did not act as a broker, dealer, salesman or associated person, as she was using buying and selling securities using her own account at BASI and DAMSI.

On 28 May 2019, the EIPD issued the Assailed Order dismissing the Complaint for lack of merit. The EIPD found that Appellee did not violate Section 28 of the SRC because she was not acting in a manner that a registered broker is conducting its business. The EIPD took into account the fact that Appellants (a) did not have, or failed to show that they opened an account with Appellee's alleged brokerage business, and (b) directly made payments for their stock purchases to BASI and DAMSI, which showed that the transaction between Appellants and Appellee was contractual in nature where the latter facilitated Appellant's buy and sell transactions of securities using her own account with BASI and DAMSI.

EIPD in its Order dated 22 July 2019 for lack of merit which resulted in the The Motion for Reconsideration filed by Appellants was denied by the

filing of the instant Appeal.

reversible error in dismissing their Complaint arguing that Appellee was engaged in the business of buying or selling securities as a broker or salesman In their Appeal, Appellants maintained that the EIPD committed

of a broker without the required license from the Commission.

On 30 September 2019,Appellee filed her Reply praying for the dismissal of the Appeal for lack of merit.

ISSUE

The sole issue presented to the Commission is whether Appellee was engaged in the business of buying or selling securities as broker in the Philippines.

DECISION

We reverse the Assailed Order of the EIPD and grant the Appeal.

In their Appeal, Appellants maintained that Appellee had been engaged in the business of buying and selling securities as a broker without the required license from the Commission which violates Section 28.1 of the SRC, and

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should thus be penalized pursuant to Section 73 of the SRC. In support thereof, Appellants posit that Appellee's acts of allegedly (a) representing that

and that she is a part owner of DAMSI79, (b) providing advice and she is a licensed broker who handled their numerous buy and sell transactions

recommending the stocks to buy and sel180, (c) sending notices of stock rights offering which rights were allegedly exercised by Appellants1, and (d charged broker's fee for her services as broker,82 constitute selling and buying of securities for the account of others.

In the Assailed Order, the EIPD anchored the dismissal of the Complaint on a) the failure of Appellants to show and establish that they opened and maintained an account with Appellee's brokerage, and (b) the finding that Appellants directly paid BASI and DAMSI the amounts covering their stock purchases,and that the proceeds of the sale of Appellants' shares were likewise deposited directly to their respective accounts. The EIPD is of the position that a person who sells or buys securities for the account of others cannot be held liable for violation of Section 28 of the SRC if such person is not adopting the procedure prescribed for, and used by registered brokers and/or is carrying out such transaction informally.

The Commission does not agree with the EIPD.

Stock market transactions affect the general public and the national economy. The rise and fall of stock market indices reflect to a considerable degree the state of the economy.Trends in stock prices tend to herald changes

with public interest, and are thus subject to public regulation.83 It is in this in business conditions. Consequently, securities transactions are impressed

context that persons who buy or sell securities, directly or indirectly, for the account of others are required to secure a license from the Commission under the pain of administrative and/or criminal liability.

Section 28 of the SRC expressly provides:

SEC. 28. Registration of Brokers, Dealers, Salesmen and Associated Persons. - 28.1. No person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered as such with the Commission." (Emphasis supplied)

only be made or carried out by a person who is duly licensed by the of selling or buying securities as a broker i.e. for the account of others can The afore-quoted provision categorically provides the rule that the act

79 Par. 48 a, (b) and e) of the Appeal 82 Par. 48 (g) of the Appeal 80 Par.48c of the Appeal 81 Par. 48 (d) of the Appeal 83 Abacus Securities Corporation vs Ampil (G.R. No. 160016, February 27, 2006)

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Page 9 of 14

Commission. Consequently, any person, juridical or natural, who engages in the business of buying and selling of securities as a broker, directly or indirectly and/or formally or informally, sans the required license violates Section 28 of the SRC and can be held administratively and/or criminally liable.

Relative thereto, the Supreme Court laid down the elements that must be present to support a finding of violation of Section 28 of the SRC in the case of SEC vs Santos84, to wit:

abuse of discretion, we pass upon the elements for violation of Section 28 of the "To determine whether the DOJ Secretary's Resolution was tainted with grave

Securities Regulation Code: (a) engaging in the business of buying or selling securities in the Philippines as a broker or dealer; or (b) acting as a salesman; or (c) acting as an associated person of any broker or dealer, unless registered as such with the SEC." (Emphasis supplied)

Sections 3.3 of the SRC defines a broker as a person engaged in the

Palanca vs RCBC Securities, Inc.85, the Supreme Court held that in the business of buying and selling securities for the account of others". In

ordinary course of a brokerage business, clients deposit funds to the bank account of their broker for credit to their trading accounts, and the broker buys and sells securities on behalf of the clients, and remits payments from transactions directly to the bank accounts of the clients. Moreover, to be engaged in business connotes a certain regularity of participation 1 purchasing and selling activities rather than a few isolated transactions.86

In other jurisdictions specifically the United States where our securities

brokers not only if they execute transactions for others on a securities laws and regulations were patterned87, persons are considered to be acting as

exchange, but also if they make referrals to broker-dealers, find investors for registered issuers, effect securities transactions for the account of others for a fee, or act as independent contractorswithout being an associated person or agent.88

In the instant case, Appellee maintains that she cannot be considered a broker because she was buying and selling stocks thru her broker using her

transacting with the registered brokers i.e. BASI and DAMSI in buying and own account at BASI or DAMSI89, and Appellants were the ones directly

84 G.R. No. 195542, March 19, 2014 85 G.R. No.241905,March 11,2020

87 Rafael A.Morales, The Philippine Securities Regulation Code (Annotated), 2005, pp.2-6. See also PSE https://www.sec.gov/reportspubs/investor-publications/divisionsmarketregbdguidehtm.html) Vs CA (G.R.No.125469,October 27,1997) 88 Guide to Broker-Dealer Registration; U.S. Securities and Exchange Commission (URL: 89 Par. 6.1 of the Answer dated 11 June 2015

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selling securities. Appellee also maintained that she cannot be considered a broker and penalized for violation of Section 28 of the SRC because only juridical persons can trade in the Exchange.90 The EIPD sustained the position of Appellee by holding that the latter cannot violate Section 28 of the SRC because her acts did not show that she was operating and conducting a brokerage business.The EIPD heavily relied on the failure of Appellants to show that they opened and maintained an account with Appellee, and the absence of the conduct of know-your-customerprocess.The EIPD thus concluded that the transaction carried out and maintained by Appellants and Appellee "was a special arrangement where Respondent Jaye, for a consideration, will facilitate the buy and sell transactions of securities of the Complainants, through her account with B. A and D.A. 91

Appellee and the EIPD are wrong.

Our securities laws were designed not only to provide investors with adequate information upon which to base their decisions to buy and sell securities, but also to protect legitimate business seeking to obtain capital through honest presentation against competition from crooked promoters and to prevent fraud in the sale of securities.92 This purpose is embodied in Section 2 of the SRC which provides for the state policies designed to establish a socially conscious, free market that regulates itself, encourage the widest participation of ownership in enterprises, enhance democratization of wealth, promote the development of the capital market, protect investors, ensure full and fair disclosure about securities, minimize if not totally eliminate insider trading and other fraudulent or manipulative devises."

SRC prohibits and punishes is the act of engaging in the business of buying Or selling securities in the Philippines as a broker i.e. for the account of others Relative thereto, it should be emphasized that what Section 28 of the

without the requisite license from the Commission. More importantly, Section

intended to apply to any person, natural or juridical, who intends to, or is actually engaged in the business of buying or selling securities for the account 28 and the other relevant provisions of the SRC which regulate brokers, are of others. These persons are mandated and required by law to register with the Commission under the pain of administrative or criminal liabilities.

The foregoing is supported by the express mandate of the Commission

compliance93 with the provisions of the SRC and its implementing to regulate, investigate or supervise the activities of persons to ensure

91 Par. 1 (page 14) of the Assailed Order 9o Ib id 92 See Philippine Stock Exchange vs Court of Appeals and Securities and Exchange Commission (G.R. No. 93 Section 5(d) of the SRC 125469,October 27,1997

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for the violation of laws, rules, regulations or orders issued pursuant thereto.94 regulations, and the express grant of power and authority to impose sanctions

On account thereof, the argument espoused by Appellee and the EIPD that persons who are engaged in buying or selling securities for the account of others using their own accounts without the requisite registration, and who are receiving fees for the said transactions, cannot be considered a broker under the SRC is without legal basis. The said argument will sanction an absurd situation that persons who are acting as brokers without the required license are placed in a more advantageous position compared to registered brokers whose business are closely monitored and strictly regulated, and will encourage the conduct of unregistered activity to the detriment of the investing public and the integrity of the market. This is clearly contrary to

conduct of brokerage activities by any person who is not licensed by the both the letter and intent of Section 28 of the SRC which seeks to prevent the

Commission.

The established and admitted facts borne in the records of the instant

executing the buy and sell transactions of Appellants.95 This was affirmed by case show that Appellee was using her account with BASI and DAMSI in

her own account and that Appellants have no individual accounts with DAMSI.96 DAMSI,through Ms.Fe.Caling,that as its client,Appellee was trading using

agreed and actively used her account to facilitate their buy and sell she was simultaneously acting as a broker in relation to Appellants when she with the registered brokers i.e. BASI and DAMSI, the Commission finds that However, while Appellee was indeed trading using her own account

effected any trade in the Exchange. This arrangement was affirmed by the transactions for a fee, so much so that her participation in the execution and consummation of the same was indispensable i.e. without Appellee who had the account with BASI and DAMSI, Appellants could not have possibly

Complainants, through her account with B. A and D.A.797 consideration, will facilitate the buy and sell transactions of securities of the EIPD which found Appellee to have facilitated the securities transactions of Appellants pursuant to a "special arrangement where Respondent Jaye, for a

made payments directly to BASI and DAMSI for the stocks that they Pursuant to the foregoing arrangement, Appellants issued checks and

purchased.Considering that it was Appellee who had the account with BASI and DAMSI, Appellee used Appellants' checks in carrying out the buy and

97 Par. I (page 14) of the Assailed Order 94 Section 5(f) of the SRC 95 Pars. 6.1 (page 8), 6.5(ii) [page 10], and 6.7 of the Answer 96 Par. 6.4 of the Answer

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sell transactions and made it appear on record that she was personally trading Appellee also effected payment of the sell transactions made for and on behalf of Appellants by depositing the amount received from BASI and DAMSI to

arguing that she cannot be considered a broker either because she was trading for her own account or Appellants were directly dealing with BASI or Appellants bank accounts. This arrangement was then used by Appellee in DAMSI. In reality however, Appellee was trading for and on behalf of Appellants using her own account with BASI and DAMSI because the latter have no accounts with these brokers.

Moreover, the records also show that Appellee was regularly providing information on the status of registered securities, and in fact admitted having an arrangement of sharing to Appellants her experience relating to her transacted shares.

More importantly, the evidence on record shows that Appellee charged

their arrangement. The EIPD found that the statements of account that were Appellants brokers feefor the transactions that were executed pursuant to

positions, but also her broker's fee. Relative thereto, the Commission notes issued personally by Appellee contained not only their stock transactions and

that in the Statements of Account that Appellee issued to Appellants, it indicated in the upper right portion the Account Name of the client i.e. Ramona Favis and the Statement Date.This is substantial evidence that as Appellee personally albeit informally established and maintained Appellants accounts that were housed in her accounts with BASI and DAMSI. Appellee in fact did not controvert this finding of the EIPD which was based on substantial evidence.

(4) years using her own account with BASI and DAMSI, and the aggregate amount ofbrokers feethat she collected from Appellants further amplifies effected by Appellee for and on behalf of Appellants during the span of four The number and frequency of the buy and sell transactions that were

the nature of the transaction that Appellee agreed to perform and do i.e. buy and sell securities for Appellants using her own account. Appellee was required under Section 28 to be registered with the Commission. The first element for violation of Section 28 of the SRC i.e. engaging in the business undoubtedly a broker as defined under Section 3.3 of the SRC who was of buying or selling securities in the Philippines as a broker, is thus present.

the Commission because she is of the position that she was not required to selling securities for the account of Appellant as established earlier, the second register since she is not a broker and did not act as one.98 Considering. however, that Appellee was in fact engaged in the business of buying and Finally, the records show that Appellee did not obtain any license from

98 Par. 12.1 of the Answer

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element for violation of Section 28 of the SRC i.e. absence of registration, is likewise present.

Section 54 of the SRC provides for administrative sanctions for violation of its provisions, to wit:

"Section 54. Administrative Sanctions. -54.1. If, after due notice and hearing, the Commission finds that: (a) There is a violation of this Code. its rule, or its orders; (b) Any registered broker or dealer, associated person thereof has failed reasonably to supervise, with a view to preventing violations, another person subject to supervision who commits any such violation; (c) Any registrant or other person has, in a registration statement

case of an underwriter, has failed to conduct an inquiry with reasonable examinations into its affairs, it shall, in its discretion, and subject only to sanctions as may be appropriate in light of the facts and circumstances: or in other reports, applications, accounts, records or documents required by a material fact, or omitted to state any material fact required to be stated their or necessary to make the statements therein not misleading; or, in the diligence to insure that a registration statement is accurate and complete in all material respects; or (d) Any person has refused to permit any lawful the limitations hereinafter prescribed, impose any or all of the following law or rules to be filed with the Commission, made any untrue statement of

( ( Suspension, or revocation of any registration for the offering of A fine of no less than Ten thousand pesos (P10,000.00) nor more securities;

(ii) (iv In the case of a violation of Sections 19.2, 20,24, 26 and 27 In the case of a violation of Section 34, a fine of no more than three Directors, or person performing similar functions, of an issuer than One million pesos (P1,000,000.00) plus not more than Two disqualification from being an officer, member of the Board of required to file reports under Section 17 of this Code or any other act, rule or regulation administered by the Commission; (3) times the profit gained or loss avoided as result of the purchase thousand pesos (P2,000.00) for each day of continuing violation;

(v sale or communication proscribed by such Section, and Other penalties within the power of the Commission to impose. (Emphasis supplied)

a client of registered brokers who was actively trading on the Exchange,was In the instant case, the evidence on record reveals that Appellee, being

aware that the act of buying and selling securities for the account of others

nonetheless agreed to use her account with BASI and DAMSI to facilitate and requires a license from the Commission. This notwithstanding, Appellee

execute the trades of Appellants for a fee. The aggregate buy and sell transactions that Appellee executed for Appellants amounted to Pesos

brokers fee that she collected from Appellants amounted to P228,640.61. Ninety-nine & 68/100 (P23,223,699.68), while the estimated aggregate Twenty Three Million Two Hundred Twenty Three Thousand Six Hundred

Ramona Favis-Velasco and Elvira L.Yulo.vs. Jaye Marjorie Rojas-Gonzales SEC En Banc Case No. 08-19-460 Page 14 of 14

fine in the amount of P228,640.61 for violation of Section 28.1 in relation to Section 3.3 of the SRC which was duly established by the evidence on record On account thereof, the Commission hereby imposes upon Appellee a

be allowed to profit and/or benefit from an act that violates the SRC. The penalty imposed which is the same amount that Appellee collected as brokers fee is based on and justified by the principle that a person should not

WHEREFORE, premises considered, the instant Appeal is hereby

Department is hereby REVERSED and SET ASIDE. Appellee JAYE MARJORIE ROJAS-GONZALES is hereby found to have violated Section 28 in relation to Section 3.3 of the SRC for engaging in the sale and purchase of securities for the account of others without license from the Commission. Twenty Eight Thousand Six Hundred Forty & 61/100 (P228,640.61) is hereby imposed upon Appellee JAYE MARJORIE ROJAS-GONZALES pursuant to Accordingly a monetary penalty in the amount of Pesos: Two Hundred Section 54 of the SRC. GRANTED.The Assailed Order of the Enforcement and Investor Protection

act/business of buying and selling securities, directly or indirectly and/or of the SRC, Appellee JAYE MARJORIE ROJAS-GONZALES is also directed to immediately CEASE and DESIST from further engaging in the formally or informally, for the account of others. Finally, pursuant to the power and authority granted under Section 53.3

SO ORDERED.

Pasay City, Philippines; 09 August 2021

EMILIO BAQUINO

Chairperson

EPHYRO LUIS B.AMATONG Commissioner JAVEYPAULD.FRANCISCO Commissioner

KELVINLESTER K.LEE Commissioner KARLO|S. BELLO Commissioner