By Keren Concepcion G. Valmonte, Reporter

IN TWO separate orders, the Securities and Exchange Commission (SEC) revoked the certification of incorporation of EMMRJ Loan Consultancy Corp. and Yellowdot Transport Terminal, Inc. over unlicensed investment activities. 

EMMRJ Loan Consultancy is a stock corporation that was registered with the commission in late April 2017, while Yellowdot Transport Terminal was registered in late March 2016 to engage in the business of developing and providing transportation services as well as operating land transport terminals.

The commission said it received numerous e-mails regarding the solicitation activities of Yellowdot Transport Terminal, which is engaged in a “You avail, We manage, You earn” fleet management business. It offers a program where an initial payment of P250,000 and a monthly amortization of P30,000 can get an investor a “millennial jeepney.”

The entity lacks the needed licenses to solicit investments from the public. The SEC also said that it has not secured registration and/or secondary licenses from the commission’s Company Registration and Monitoring Department, Markets and Securities Regulation Department, and Corporate Governance and Finance Department.

The regulator issued an advisory against Yellowdot Transport Terminal in August 2019 to warn the public about its investment schemes and in the same month, the commission issued a show-cause order sent to its principal office and its stockholders-directors-incorporators Jerry C. Castillo, Clarible C. Lincod, Guadylynne C. Bauto, and Rodel Bauto.

Yellowdot Transport Terminal responded on Sept. 1, 2020 and maintained that its memorandum of agreement with the public is not considered an investment contract.

“Yellowdot merely sells modernized jeepneys, under the government’s PUV Modernization Program, albeit with unique management features, which does not necessarily mean, however, that the same is an investment contract/agreement, warranting registration with the SEC,” it said.

Yellowdot Transport Terminal offered a supplemental response with an offer worth P630,000 covering 21 subsisting contracts to “reinforce Yellowdot’s well-founded assertion that it is not engaged in offering investment contracts to the public.” 

It also prayed that the commission lifts its advisory against the entity, ceases the solicitation of new contracts, to allow its premises and records to be inspected.

“The Memorandum of Agreement readily shows that it is a sale and purchase agreement with an integrated management service agreement,” the entity said.

However, the SEC said it found the entity promising investors monthly returns of P55,000 to P85,000 with its “You avail, We manage, You earn” business. The Land Transportation Franchising and Regulatory Board also confirmed this in a notice, the SEC said.

After receiving the settlement offer, the SEC’s Enforcement and Investor Protection Department (EIPD) requested the entity’s investor-related documents, its audited financial statements, and copies of contracts and agreements with investors, and an action plan for returning the money to investors plus interest.

In a conference meeting in January 2021, the SEC also requested its counsel to submit an amended list of investors, their income report, and cases pending against the company, should there be any.

The EIPD denied the settlement offer following Yellowdot Transport Terminal’s noncompliance with its conditions, despite a deadline extension. It also said that the elements of investment contracts were manifested in the offers of Yellowdot.

Meanwhile, EMMRJ Loan Consultancy’s primary purpose of incorporation details its role to conduct market research and sell products of a bank or financial organization and to look for possible clients seeking personal or home loans, among other responsibilities related to loan consultancy.

Its certificate of incorporation explicitly states that the firm is not authorized to conduct business activities that require a secondary license from the commission.

In August 2018, the SEC issued an advisory against EMMRJ Loan Consultancy, which also goes by EMMRJ Lending Investors Corp., after the regulator received reports that the entity was engaged in lending activities and was soliciting investments from the public via social media.

The SEC then issued a show-cause order to EMMRJ in October 2018 to explain in writing why it should not be cited for violation by engaging in the business of lending without authority, for soliciting investments sans a permit to sell from the commission, and why its registration should not be revoked.

EMMRJ President Elaine Joy Santos responded to the SEC’s show-cause order after 13 days and the regulator said EMMRJ “failed to deny the allegations.” Ms. Santos said the company is “totally incognizant of its purported need to secure a secondary license or permit relative to some of its business endeavors.”

She also said that EMMRJ is “more than willing” to secure the required license “if truly warranted by the nature of the business activities.”

A complaint affidavit was filed with the EIPD in August 2020 by Ryan Panopio, who invested a total of P1.17 million in EMMRJ.

“Respondent Santos explained to me that EMMRJ is an in-house loan provider to different call centers in Makati. In fact, respondent Santos showed me several applications of borrowers that were pending that time,” Mr. Panopio said.

“Moreover, respondent Santos assured me that I will get a monthly ten percent income If I invest my money in EMMRJ and it will increase through time,” he added.

EMMRJ failed to submit a detailed list of investors and transactions made as promised in an April 2019 conference with the EIPD, where Ms. Santos also confirmed that the EMMRJ has no secondary license to offer investments to the public nor a certificate of authority from the commission to engage in lending activities.

In an order dated Aug. 12, the SEC revoked EMMRJ’s certificate of incorporation and its registration. The regulator noted that the scheme it offers “bears telltale signs of a Ponzi scheme,” where investments of new investors are used to pay for the profits of old investors.