GOLDEN CASH, HELP CASH, and GRACE CASH

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance IN THE MATTER OF: GOLDEN CASH, HELP CASH, and GRACE CASH DEPARTMENT (EIPD), ENFORCEMENT INVESTOR PROTECTION Movant. AND SEC CDO Case No. 04-22-089 X CEASE AND DESIST ORDER sites of the Online Lending Operators and any and all persons or entities media platforms the promotional materials used to advertise their products agents, representatives and promoters, as weli as the owners of the hosting abetting and/or promoting lending/financing business and related activities without the requisite license from the Commission, and (b) offering and/or advertising their lending business and related activities through the internet and any other media, and to delete or remove from the internet and social involved, directly or indirectly, in their operations, directing them to immediately cease and desist from (a) operating, engaging in, carrying out and services. (collectively referred to as the "Online Lending Operators "), including their Orderi (the "Motion") filed by the Enforcement and Investor Protection Department (EIPD) on 9 March 2022 praying that a Cease and Desist Order ("CDO") be issued against the operators and owners of the following online lending applications: GOLDEN CASH,HELP CASH, and GRACE CASH This resolves the Motion for the Issuance of a Cease and Desist RELEVANT FACTS alleged that the Online Lending Operators are engaged in unauthorized lending activities and unfair debt practices.2 Corporate Governance and Finance Department (CGFD) to the EIPD for appropriate action, the numerous complaints it received from the public which The filing of the present Motion stemmed from the endorsement by the Lending Company Regulation Act of 2007, which the Commission is formal investigation for possible violation of Republic Act No. 9474 or the Acting on the said endorsement, the EIPD proceeded to conduct a 1 Dated on 09 March 2022. 2 Annex "C" of the Motion. CERTFIEO TRUE COPY O SE OG P THE DO -UMENTS ON RECORD O PAGF Y IN THE MATTER OF GOLDEN CASH, HELP CASH, and GRACE CASH SEC CDO Case No. 03-22-085 Cease and Desist Orde. Page 2 of 9 mandated to administer and implement. For this purpose, the EIPD looked Operator GOLDEN CASH is still downloadable and accessible to the public. which in effect confirmed the alleg into Google Play Store and were indeed actually operating The EIPD was also able to con was able to confirm that the Online Lending that the Online Lending Operators nline lending business. given to the Online Lending Operators, which ar ternet and social media users/borrowers' experiences on the platforms, are replete with. and essing fee and/or hidden comments covering the charges assessed against them, as well the. of threat, insult, or profane language by the Online Lending Operators in exacting payment of the loan investigator who executed and issued an affidavit which was submitted in amount.4 The foregoing was also confirmed and attested to by the handling evidence. GRACE CASH are no longer available for download in Google Play Store. The records show that the online applications of HELP CASH and the Online Lending Operators who alleged to have been harassed, threatened. publicly humiliated, and assessed hidden charges and excessive processing fees by the Online Lending Operators. The EIPD also submitted in evidence the complaints of borrowers of nor a one-person corporation which the Lending Company Regulation Act of 2007 requires from of all entities that are "engaged in lending business/activities. CASH, and GRACE CASH are not registered as a corporation, partnership Online Lending Operators of the applications GOLDEN CASH, HELP Finally, the EIPD alleged and presented evidence showing that the issued by the Company Registration and Monitoring Department (CRMD) the Online Lending Operators GOLDEN CASH, HELP CASH, and pursuant to SEC Memorandum Circular No. 19 Series of 2019 (SEC MC 19)9 which confirmed that the Online Lending Operators are not registered as a corporation, partnership nor a one person corporation, and (b) the Memorandum dated 07 March 20228 issued by the CGFD which stated that GRACE CASH are not included in the List of Financing and Lending Companies with Online Lending Platforms (OLPs) reported to the SEC Relative thereto, the EIPD presented in evidence (a) the Certification7 Reporting of Online Lending Platforms. 4 Annex "A"-"A-5" of the Affidavit. 5 Annex "B" of the Motion. Annexes "E" to "E-1" of the Motion. 9 Disclosure Requirements on Advertisements and Financing Compani 3 Annex "B" "B-4" of the Affidavit. Annex "D" of the Motion. Anr "A" of the Motion. and Lending Companies and TETIEO TRE CODYO THE DOCUMENTS ON RECORD IN THE MATTER OF GOLDEN CASH, HELP CASH, and GRACE CASH SEC CDO Case No. 03-22-085 Cease and Desist Order Page 3 of 9 ISSUE Whether the evidence presented by the EIPD on record warrants the issuance of a CDO against the Online Lending Operators. RULING The Commission finds merit in the Motion and hereby grants the same. the EIPD that the Online Lending Operators are either actually engaged in the business of offering and providing loans to the public, and/or are carrying out transactions proper to a lending company without a validly subsisting Certificate of Authority to operate as Lending Companies or Financing Companies from the Commission, or engaged in unfair debt collection practices under SEC Memorandum Circular No. 18, series of 2019 (MC 18)10 The pieces of evidence presented sufficiently support the allegations of are specifically provided in Section 5.1(a) of Republic Act No. 8799 or the Securities Regulation Code (SRC), thus: The powers and authority, as well as the jurisdiction of the Commission have, among others, the following powers and functions: Commission shall act with transparency and shall have the powers and Corporation Code, the Investment Houses law, the Financing Company Act and other existing laws. Pursuant thereto the Commission shall "Section 5. Powers and Functions of the Commission -- 5.1. The functions provided by this code, Presidential Decree No. 902-A, the Have jurisdiction and supervision over all corporations, partnership or associations who are the grantees of primary franchises and/or a license or a permit issued by the Government; XXX XXX XXX Regulate, investigate or supervise the activities of persons to ensure compliance; XXX XXX XXX () 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 achieve the objectives and purpose of these laws." (Emphasis and underscoring supplied) the carrying out of, the express powers granted the Commission to 1o Prohibition on Unfair Debt Collection Practices of Financing Companjes and Lending Companies:( PAGE THE DOCUMENTS ON RECORD CERTIFIFD TRUE COPY OF O IAGFS IN THE MATTER OF GOLDEN CASH, HELP CASH, and GRACE CASH SEC CDO Case No. 03-22-085 Cease and Desist Order Page 4 of 9 In relation to the performance of its authority to investigate persons, emphasized in Provident International Resources Corp. v. Venus,11 that the and exact compliance with laws administered by it, the Supreme Court Commission has the concomitant duty to impose the appropriate sanctions/penalties for non-compliance, thus: applications for, or may suspend or revoke (after due notice and hearing), "It can be said that the SEC's regulatory authority over private corporations encompasses a wide margin of areas, touching nearly all of a corporation's concerns. This authority more vividly springs from the_fact that a certificates of registration of corporations, partnerships and associations (excluding cooperatives, homeowners' association, and labor unions); compel legal and regulatory compliances; conduct inspections; and impose (Emphasis supplied) corporation owes its existence to the concession of its corporate franchise 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 warranted." from the state. Under its regulatory responsibilities, the SEC may pass upon lending companies should be registered as a corporation and should have an authority to operate issued by the Commission, to wit: implement is Republic Act No. 9474, otherwise known as the "Lending Company Regulation Act of 2007 (the "Lending Company Regulation Act") Section 4 of which specifically requires that persons or entities operating as Among the existing laws that the Commission is mandated to "SEC. 4. Form of Organization. - established only as a corporation: Provided That existing lending investors organized as single proprietorships or partnerships shall be disallowed from engaging in the business of granting loans to the public one year after the date of effectivity of this Act. A lending company shall be to operate by the SEC." (Emphasis and underscoring supplied) No lending company shall conduct business unless granted an authority operate obtained from the Commission, engages in the business of a lending without being registered as a corporation and without a subsisting authority to company, to wit: The Lending Company Regulation Act penalizes any person who, or both, at the discretion of the court, shall be imposed upon: "SEC. 12.Penalty.- A fine of not less than Ten Thousand Pesos (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) years 1 Any person who shall engage in the business of a lending company without a validly subsisting authority to operate from the SEC. 11 G.R. No. 167041, June 17, 2008. SE( OG CFRTIFIFD TRUE COPY OF THE DOCUMENTS ON RECORD PAGE U T DAET B IN THE MATTER OF GOLDEN CASH HELI SEC CDO Case No. 03-22-085 CASH. and GRACE CASH Cease and Desist Orde. Page 5 of 9 2 The president, treasurer and other officers of the corporation. including the managing officer thereof, who shall knowingly and willingly: b 2 Engage in the business of a lending company without a Hold themselves out to be a lending company, either through validly subsisting authority to operate from the SEC; C underscoring supplied) in this Act without authority; and Violate the provisions of this Act." (Emphasis and advertisement in whatever form, whether in its stationery, representations without authority: is engaged in the business of a lending company as defined commercial paper, or other document, or through other Make use of a trade or firm name containing the words "lending company" or "lending investor" or any other designation that would give the public the impression that it prevent and mitigate the commission of practices prejudicial to public interest, the Commission is mandated in Section 2 of the Lending Company Regulation Act to implement the policy of regulating lending companies to effectively thus: In relation to the lending business and industry, it bears emphasis that lay down the minimum requirements and standards under which they may be established and do business." (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 "SEC. 2. Declaration of Policy. - It is hereby declared the policy of the Company Regulation Act because it engages in or carries out a lending business without the required license from the Commission. operations of GOLDEN CASH, HELP CASH, and GRACE CASH constitute a clear violation of, and should be penalized pursuant to the Lending On the basis of the foregoing, the Commission finds that the continued that, as a matter of policy, the States seeks to prevent and penalize. CASH and their agents and representatives are the very acts and practices unreasonable terms and conditions imposed by GOLDEN CASH, and HELP Moreover, the abusive collection practices, misrepresentations, and or necessary in carrying out its mandate, to wit: protect the public, Section 179(f) and (p) of the RCC authorizes it to issue a cease and desist order and to perform such other powers which are incidental To ensure that the Commission is able to perform this mandate and to SEC OG THE DOCUMENTS ON RECORD CERTUFIFD TRUE COPY OF PAG Pagt IN THE MATTER OF GOLDEN CASH, HELP CASH, and GRACE CASH SEC CDO Case No. 03-22-08s Cease and Desist Order Page 6 of 9 Section 179. Powers, Functions, and Jurisdiction of the Commission. - The Commission shall have the power and authority to: XXXXXXXXX Issue cease and desist orders ex parte to prevent imminent fraud or injury to the public; XXXXXX XXX p) granted to the Commission. (Emphasis and underscoring supplied) Exercise such other powers provided by law or those, which may be necessary or incidental to carrying out the powers expressly penalties provided under Section 12 of the Lending Company Regulation Act. been issued the Certificate of Authority which is required to validly engage in lending activities. The acts of GOLDEN CASH, HELP CASH, and GRACE CASH in engaging in the lending business sans the required registrations/licenses constitute a clear violation of Section 4 of the Lending Company Regulation Act, which warrants the imposition of the appropriate GOLDEN CASH,HELP CASH, and GRACE CASH are not registered with the Commission either as corporations, partnerships, or one person corporation. Neither is there anything on the records of the Commission that will show that GOLDEN CASH,HELP CASH,and GRACE CASH have The certifications issued by the CGFD12 and CRMD13 confirmed that evidence presented by the EIPD. engage in the lending business which is not and has never been the case. This. in fact resulted in the public actually taking loans from GOLDEN CASH, HELP CASH, and GRACE CASH as shown in the complaint and in the GOLDEN CASH,HELP CASH, and GRACE CASH are illegally engaging no Certificate of Authority issued by the Commission. Thus, the acts of GOLDEN CASH, HELP CASH, and GRACE CASH in offering and providing loans to the public constitutes actual fraud14 which was intentionally employed to lead the public into the belief that they are legally authorized to in lending activities as the latter are not registered as corporations, and have Furthermore, the evidence presented by the EIPD shows that Lending Company Regulation Act, the GOLDEN CASH, HELP CASH, and GRACE CASH cannot offer and provide loans to the public. Without the Certificate of Authority which is required under the deception practiced by means of the misrepresentation or concealment of a material fact. Constructive 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) 13 Id 14 "Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional 12 Id SE OGC PAG THE DOCUMENTS ON RECORD CERTIFIED TRUE COPY OP G O PAGFS IN THE MATTER OF GOLDEN CASH, HELP CASH, and GRACE CASH HI.I Cease and Desist Order No. 03-22-085 Page 7 of 9 MC 18, as follows: Online Lending Operators which are expressly prohibited under Section 1 of The Commission also condemns the unfair collection practices of the a. The use or threat of use of violence or other criminal means to harm the physical person, reputation, 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 to a criminal act or offense under applicable laws; consequence of which is to abuse the borrower and/or which amount d. Disclosure or publication of the names and other personal information of borrowers who allegedly refuse to pay debts, except as may be allowed under Section 2 hereof; e. Communicating or threatening to communicate to any person loan including the failure to communicate that the debt is being disputed. except as may be allowed under Section 2 hereof; information, which is known, or which should be known, to be false, f. The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a borrower; and g. Making contact at unreasonable/inconvenient times or hours, which borrower has given express consent that the said times are the only reasonable or convenient opportunities for contact. shall be defined as contact before 6:00 A.M. or after 10:00 P.M., unless the account is past due for more than fifteen (15) days, or the recorded means, may be given prior to, during, or after the execution of the loan agreement. Such consent which shall be evidenced by written, electronic or h. Notwithstanding the borrower's consent, contacting the persons in the borrower's contact list other than those who were named as guarantors or co-makers shall also constitute unfair debt collection practice. business. This is a power that is expressly granted to the Commission under issuance of a CDO is warranted in the instant case not only to stop the illegal act, but also to prevent the continued fraud on the public who are led by the Online Lending Operators to the belief that they are operating a legitimate On account thereof, the Commission finds and so holds that the S( Oc DA HE DO CERTIFIED TRUE COPY OF 2 UMENTS ON RECORD C PAGES 3 IN THE MATTER OF GOLDEN CASH, HEL 2 ind GRACE CASF SEC CDO Case No. 03-22-08s Cease and Desist Order Page 8 of 9 Section 179 (f) and (p), in relation to the SRC and the Lending Company Regulation Act. public is protected from persons who carry out unauthorized or illegal lending offering and providing loans to the public, charging high interest rates, and 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 times upheld, and that the 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 activities. The acts of these unregistered Online Lending Operators in illegally representatives, agents AND ANY AND ALL PERSONS CLAIMING AND ACTING FOR AND IN THEIR BEHALF, are hereby ORDERED to immediately CEASE AND DESIST from engaging in, carrying out, incorporated and have secured from this Commission the requisite Certificate of Incorporation and Certificate of Authority to Operate as Lending CASH and GRACECASH, its owners, promoting and facilitating any lending activity/transaction until they have Companies or Financing Companies. WHEREFORE, premises considered, GOLDEN CASH, HELP operators,promoters, immediately CEASE AND DESIST from engaging in unfair debt collection practices prohibited under MC 18. representatives, agents AND ANY AND ALL PERSONS CLAIMING AND ACTING FOR AND IN THEIR BEHALF, are likewise ORDERED to GOLDEN CASH and HELP CASH, its owners, operators, promoters, operators, promoters, representatives, agents AND ANY AND ALL and DESIST from offering and advertising their lending business through the internet or any other media, and to delete/remove any and all materials involving or covering the same. PERSONS ACTING FOR AND IN THEIR BEHALF,are directed to CEASE GOLDEN CASH, HELP CASH, and GRACE CASH, its owners. The EIPD is hereby DIRECTED to: 2.) 1 Cause the posting of a copy of this CDO in the Commission's Coordinate with the appropriate cyber-criminal investigation and website, and the publication of the same in two (2) newspapers of general circulation; involved in the illegal online operations of GOLDEN CASH, determine, identify, and apprehend , the _responsible persons enforcement agency(ies) of the government in order to PHE DOCUMENTS ON RECORD CERTIFIED TRUE COPY OE PAGE 8 0 PAGE IN THE MATTER OF GOLDEN CASH, HELP CASH, and GRACE CASH SEC CDO Case No. 03-22-085 Cease and Desist Order Page 9 of 9 3 HELP CASH, and GRACE CASH, including its author Submit a formal compliance report, by way of pleading, to the Commission En Banc within ten (10) days from receipt of this representative conniving with them. The EIPD is also directed to conduct an investigation to determine and recommend the filing CDO. creator, of a criminal complaint, if warranted; and owner and its officers, or any person. agent. lift thereof within five (5) days from the date of its posting or publication. 3, Rule 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 to In accordance with the provisions of Sec. 64.315 of the SRC and Sec. 4- SO ORDERED. Pasay City, Philippines; 26 April 2022. MM EMILIO{B/AQUINO Chairberson JAVEY PAUL D. FRANCISCO Commissioner KEWNLESTER K. LEE Commissioner KARLO Commissioner S. BELLO MCJ BRYANT T. FERNANDEZ Commissioner I5 Any person against whom a cease and desist order was issued may, within five (5) days from receipt of the prescribed, the cease and desist order shall automatically be lifted. 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 request within the time herein SE( OG CERTIFIED TRUE COPY OI THE DOCUMENTS ON RECORD 31 O PACE 'Y