Executive Summary:
We had highlighted decided cases for appreciation of the implementation of laws in concrete experience.
1. National Privacy Commission (NPC) found Board of Directors of an online lending company liable for violation of Data Privacy Act of 2012 (RA 10173) for not having "valid consent" in the processing of its customer's personal information and "unlawful debt collection" procedure.
2. The Securities and Exchange Commission (SEC) prohibits Royal O' Consultancy Services, Oromagnent Egames, Plasmatech Medical Supplies Trading, and Princess Joana Jo Alfajid Foundation from transacting business using the funds in its depository banks and from transferring and disposing all its assets, to ensure the preservation of funds of its investors.
3. The Supreme Court (SC) provides Rules on the Use of Body-Worn Cameras in Execution of (Arrest and Search) Warrants.
NPC CASE: Online Lending Application (NPC 19-190)
The Board of Directors of online lending company was charged for violation of Data Privacy Act of 2012 Sections 25 (Unauthorized Processing), 28 (Processing for Unauthorized Purposes), 31 and 32 (Malicious and Unauthorized Disclosure).
The complaint stated that they secured loan with the company through mobile application (mobile app) platform downloaded from Google Play Store. It was asserted that personal information from their mobile phone like directory, contact list, photos, email, and social media details were collected and used without their consent.
It was further asserted that when they defaulted payment, the lending company sent malicious messages to the phone numbers in their contacts (text blast).
During investigation of NPC, it was revealed by Google Play that the mobile app required forty four (44) permissions, seven (7) of which are classified as dangerous permission. The ability to read the user's contact is a dangerous permission.
In defense, the lending company alleged that it has privacy policy that the user must "agree" when the mobile app is downloaded and "agree again" when a loan is applied. The respondent further states that the Board of Directors are not liable since they did not consented to the acts of the collection agents. The collection of loan repayments were outsourced to a third-party service provider.
The NPC ruled in the following manner:
The processing of the personal information and sensitive personal information was done without the consent of the data subject, or without being authorized under this act or any existing law.
The NPC ruled that there is no "valid consent." Privacy policy notice and consent to process personal information are not the same. Being a mere privacy policy notice, it is emphasized that the privacy notice is not equivalent to consent. It is a mere embodiment of the observance of data privacy principles of transparent and upholding the right to information of the data subjects.
The fact that the data subject must agree to a privacy policy or notice fails to meet the requirement of meaningful consent. A "bundled" consent, for instance, will generally not suffice as the data subject is not empowered to make a true choice.
The Credit Agreement failed to give the specific purpose for the consent. The phrase "in order to achieve the purpose of this agreement" is too broad as basis for consent. The information must be concrete and definitive, it should not be phrased in abstract or ambivalent terms or leave room for different interpretations.
The Board of Directors are civilly and criminally liable and cannot deny liability by saying that it was a third party contractor's fault. The company had allowed the harassment of its borrowers by surrendering all accountability to its subcontractor. The company, through its Board of Directors, lacked supervision over representations of the third party contractor made to all of its borrowers.
SEC CASE: Investment Scam (SEC CDO Case No, 07-21-072)
The SEC issued a Cease and Desist Order against Royal O' Consultancy Services, Oromagnent Egames, Plasmatech Medical Supplies Trading, and Princess Joana Jo Alfajid Foundation and prohibits the use of their funds and assets to protect their investors.
The SEC, through Enforcement and Investor Protection Department (EIPD), instituted this action based on complaints and their investigation. It was discovered that Royal O' et. al. Had been asking investment or membership fee with a promise of return in the amount of 3% to 6% per day for 67 days.
The company makes it appear that they have several businesses operations like ONLINE SABONG, medical supplies, international trade, among others. However, investigation showed that the company has no legitimate and valid operating business. Negative certification were issued by SEC, BOC, FDA, NFA, and PAGCOR to show that it is not authorized to conduct business.
The act of the company in making business presentations conducted via Zoom, post made in Facebook and Youtube inviting and enticing investors to part with their hard earned money where they are promised to receive guaranteed returns, constitute public offering of securities as defined in Rule 3.1.17 of the 2015 IRR of the SRC. The company must have a secondary license to offer security.
The SEC ruled that it is an escapable conclusion that the sources of Royal O's profits which were used to pay the guaranteed returns of its investors were derived not from legitimate business activities, but solely from the unauthorized investment taking activities. Moreover, the investment scheme employed by Royal O' has the characteristics of a Ponzi Scheme as it promises an exorbitant returns with little or no risk at all to investors.
The investment scheme is not sustainable because the time will come that no more new investor will com in, and this reality will likely cause grave irreparable injury or prejudice to the investing public.
Use of Body-Worn Cameras in Execution of Warrants (AM No. 21-06-08-SC)
The Supreme Court, through its power of promulgate rules, instructed the use of body-worn cameras in execution of arrest and search warrants. The recordings can deter the excessive use of force by law enforcement in the execution of warrants and can aid trial courts in resolving issues that may become relevant in the criminal case, such as conflicting eye witness accounts.
In Arrest Warrant, when the judge finds probable cause and issued a warrant of arrest, it would also include the use of body-worn cameras. The person to be arrested must be notified that there is a recording and are making the arrest based on a warrant of arrest issued by a court.
Failure to observe the requirement of using body-worn camera shall not render the arrest unlawful or render the evidence obtained inadmissible. Facts surrounding the arrest may be proved by testimonies of the arresting officers, the person arrested and other witnesses of the arrest.
In Search Warrants, when the judge finds probable cause, the use of body-camera in execution of search warrant must be observed. The search warrant must particularly describe the places to be searched and/or the properties to be seized as prescribed by the Rules of Court. The lawful occupant of the place searched must be notified, as early as practicable, that the officers are wearing cameras.
Failure to observe the requirement of using body-worn cameras, without reasonable grounds, during the execution of the search warrant shall render the evidence obtained inadmissible for the prosecution of the offense for which the search warrant was applied.
The data recorded by body-worn cameras are not public record subject to disclosure, unless the recordings involve an incident resulting in a loss of life or an assault made on law enforcement officers during the arrest or search. Recordings and copies of such recordings that depict or record circumstances in which a person dies while being apprehended by or while in the custody of law enforcement officers, or when assault is made on law enforcement officers, are considered public record.
To be admitted as evidence, any recording taken must be presented during trial and authenticated by the person who captured the recording. The person arrested or those affected by searches and seizures of the recordings in a court proceeding shall be asked for consent to use in court.
For evidentiary purposes, the recordings captured by body-worn cameras are suppletory to the testimonies of the persons subject of the recording or the law enforcement officer. The recording shall not be deemed as substitutes for the presentation of witnesses.
