The cease and desist order (CDO) issued against Primanila Plans Inc. has been made permanent by the Securities and Exchange Commission (SEC) after the corporate regulator junked the pre-need firm’s motion for reconsideration for lack of merit.
The CDO, issued in April this year, prevents Primanila Plans Inc., a pre-need firm whose clients comprise mostly personnel of the Philippine National Police, from soliciting investments from the public and collecting payments and amortizations from planholders.
The issuance of the CDO was an offshoot of the investigation conducted by the SEC’s Compliance and Enforcement Department that showed Primanila selling pre-need plans to the public without prior registration and the necessary license in violation of the Securities Regulation Code (src) and the New Rules on the Registration and Sale of Pre-Need Plans.
In its motion for reconsideration, Primanila said it was denied due process in proceedings and that the CDO “unnecessarily prejudices the planholders and erodes the confidence of the public on pre-need companies.”
Primanila likewise maintained that it was not selling pre-need plans and collection premiums from the public.
In denying Primanila’s request, the SEC cited Sec. 64 of the src which states that the “commission may issue a CDO without need of notice and hearing to the erring corporation.”
The SEC also stressed that Primanila used its website to advertise and offer for sale plans to the public. “The contents of the alleged advertisements validates that Primanila is actually offering and selling said plans to the public considering that it includes detailed instructions as to how interested persons can avail of pre-need plans and where the initial and succeeding payments of premiums can be made by the planholders,” the SEC said in its order.
Moreover, the SEC pointed out that the CDO is “indispensable to protect the prospective planholders and the public in general from buying a worthless security and to forestall the declining confidence of the public in the billion-peso pre-need industry.”
Based on the investigation conducted by the CED, Primanila, chaired by Eduardo Madrid, closed down its office at the 20th floor of Philippine AXA Life Center in Makati City without prior approval of the SEC. No notices were posted outside the company’s office to inform the public of the reason for such closure.
According to the CED, Primanila did not renew its dealer’s license for 2008, a prerequisite before selling pre-need plans. The company likewise failed to register with the SEC a pension plan product called Primasa Plan which it is selling on its website.
Primanila was also found to have failed to deposit the required monthly contributions to its trust fund in violation of Pre-Need Rule 19.1.
The company was also found to have under-declared the total amount of its collections. In its monthly reports submitted to the SEC, Primanila said it collected only P302,081 from January to September 2007. However, the remittance report of the PNP showed that it remitted P1.69 million during the said period.
Records show the PNP remitted a total of P2.072 million to Primanila representing premium collections through salary deductions of 410 PNP personnel on a monthly basis.