2014 Case Digest: SEC v. Santos

SECURITIES AND EXCHANGE COMMISSION, Petitioner,

 v.

 OUDINE SANTOS, Respondent.

G.R. No. 195542,           March 19, 2014

PONENTE: Perez

TOPIC: SRC, unregistered broker or dealer

FACTS:

                Sometime in 2007, yet another investment scam was exposed with the disappearance of its primary perpetrator Liew, a self–styled financial guru and Chairman of the Board of Directors of Performance Investment Products Corporation (PIPC–BVI), a foreign corporation registered in the British Virgin Islands.To do business in the Philippines, PIPC–BVI incorporated herein as Philippine International Planning Center Corporation (PIPC Corporation).

                Because the head of PIPC Corporation had gone missing and with it the monies and investment of a significant number of investors, the SEC was flooded with complaints from 31 individuals against PIPC Corporation, its directors, officers, employees, agents and brokers for alleged violation of certain provisions of the SRC, including Section 28 thereof.  Santos was charged in the complaints in her capacity as investment consultant of PIPC Corporation, who supposedly induced private complainants Lorenzo and Sy, to invest their monies in PIPC Corporation.

                On her defense, Santos alleged that she was merely an employee of PIPC thus should not be personally liable.

ISSUE:

                Whether or not Santos violated Sec. 28 of SRC which punishes unregistered broker or dealer who engage in business of buying or selling securities.

HELD:

                YES. The Court held that Santos acted as an agent or salesman of PIPC Corporation making her liable under Sec. 28 of SRC.

                There is no question that Santos was in the employ of PIPC Corporation and/or PIPC–BVI, a corporation which sold or offered for sale unregistered securities in the Philippines.  To escape probable culpability, Santos claims that she was a mere clerical employee of PIPC Corporation and/or PIPC–BVI and was never an agent or salesman who actually solicited the sale of or sold unregistered securities issued by PIPC Corporation and/or PIPC–BVI.

                Solicitation is the act of seeking or asking for business or information; it is not a commitment to an agreement.

                Santos, by the very nature of her function as what she now unaffectedly calls an information provider, brought about the sale of securities made by PIPC Corporation and/or PIPC–BVI to certain individuals, specifically private complainants Sy and Lorenzo by providing information on the investment products of PIPC Corporation and/or PIPC–BVI with the end in view of PIPC Corporation closing a sale.

                While Santos was not a signatory to the contracts on Sy’s or Lorenzo’s investments, Santos procured the sale of these unregistered securities to the 2 complainants by providing information on the investment products being offered for sale by PIPC Corporation and/or PIPC–BVI and convincing them to invest therein.

                Thus, Santos violated Sec. 28 of SRC. Its elements are as follows:

1. Engaging in the business of buying or selling securities in the Philippines as a broker or dealer;
2. Acting as a salesman; or
3. Acting as an associated person of any broker or dealer, unless registered as such with the SEC.