G.R. No. 195542 March 19, 2014
SECURITIES AND EXCHANGE COMMISSION, Petitioner, vs. OUDINE SANTOS, Respondent.

FACTS

The Securities and Exchange Commission (SEC) filed a criminal complaint before the Department of Justice against Oudine Santos and others for violation of the Securities Regulation Code (SRC). The complaint stemmed from an investment scam involving Performance Investment Products Corporation (PIPC-BVI) and its Philippine affiliate, Philippine International Planning Center Corporation (PIPC Corporation). The primary perpetrator, Michael H.K. Liew, disappeared along with investor funds. Santos was charged in her capacity as an investment consultant of PIPC Corporation for allegedly inducing complainants Luisa Mercedes P. Lorenzo and Ricky Albino P. Sy to invest. Lorenzo and Sy, in their affidavits, detailed that Santos conducted presentations on the “Performance Managed Portfolio,” assured them of safety and high returns (12-18% per annum), emphasized principal protection, gave instructions for fund remittance, and had them sign Partnership Agreements. They invested US$40,000 and more based on her solicitations. The SEC’s complaint alleged violations of Sections 8 (Requirement of Registration of Securities), 26 (Fraudulent Transactions), and 28 (Registration of Brokers, Dealers, Salesmen) of the SRC. The Secretary of Justice dismissed the complaint against Santos, a ruling affirmed by the Court of Appeals. The SEC elevated the case to the Supreme Court via a petition for review on certiorari.

ISSUE

Whether the Secretary of Justice committed grave abuse of discretion in dismissing the criminal complaint for violation of Section 28 of the Securities Regulation Code against respondent Oudine Santos.

RULING

The Supreme Court DENIED the petition and AFFIRMED the resolutions of the Secretary of Justice and the decision of the Court of Appeals. The Court held that the Secretary of Justice did not commit grave abuse of discretion. For a violation of Section 28 of the SRC, which prohibits any person from engaging in the business of buying or selling securities as a broker or dealer unless registered with the SEC, the statute requires that the accused be acting for “any broker or dealer.” The evidence presented, including the affidavits of the complainants, did not establish that Santos was acting for a broker or dealer. The Partnership Agreements identified the “Issuer” of the security as PIPC-BVI, a foreign corporation, not a broker or dealer. There was no allegation that PIPC-BVI was engaged in the business of buying or selling securities for others as a broker or dealer. The acts of Santos, such as soliciting investments and facilitating the execution of agreements, constituted acts of an agent of the issuer (PIPC-BVI) in selling securities, not acts of an agent of a broker or dealer. Therefore, the essential element for a violation of Section 28 was lacking. The Court clarified that its ruling was limited to the specific charge under Section 28 and did not preclude potential liability under other provisions of the SRC.