Primanila Plans Inc. will seek the intervention of the Court of Appeals for the lifting of the cease and desist order (CDO) issued against it by the Securities and Exchange Commission (SEC) for its alleged unauthorized sale of securities to the public.
Primanila chairman Eduardo S. Madrid said the CDO, which was made permanent by the SEC last week, will be “elevated to the Court of Appeals in a petition for review.”
Madrid likewise clarified that the CDO covered only the sale of Primasa Plans and not the collection of premiums or amortizations from existing plans. Primanila is a pre-need firm whose clients comprise mostly personnel of the Philippine National Police (PNP).
The SEC, however, maintained that Primanila can no longer sell pre-need plans to the public due to the absence of a dealer’s license. “They can only service, existing plans but can not sell plans anymore because they don’t have a dealer’s license,” said Hubert Guevara, head of the Compliance and Enforcement Department, the surveillance unit of the SEC.
According to the SEC’s Non-Traditional Securities Department, Primanila was not issued a dealer’s license for 2008. Without a dealers’ license, a pre-need firm can not sell plans to the public even if the securities sold had been earlier registered with the SEC.
The CDO stemmed from an investigation conducted by the CED which showed that Primanila allegedly sold a pension plan product called Primasa Plan without prior registration with the SEC.
However, Madrid argued that Primasa Plan was never launched and sold to the public and that the SEC investigation even failed to prove that there was a sale.
“They were not able to purchase a plan through the website. This is hardly the investigation referred to under the law that may be the basis of the issuance of the CDO. The other ground provided for under the law for the issuance of the CDO is through a verified complaint. This was not the basis of the issuance of the CDO,” Madrid said.
But the SEC said Primanila’s allegation that it did not sell or is not selling and collecting premiums from Primasa Plan is “devoid of merit,” pointing out the sale was made through the pre-need firm’s website. “It can not be denied that Primanila used its website to advertise and offer for sale Primasa Plan to the public. The contents of the alleged advertisements validates that Primanila is actually offering and selling the said plans to the public considering that it includes detailed instructions as to how interested persons can avail Primasa Plan and where the initial and succeeding payments of premiums can be made by the planholders,” the commission said.
Madrid likewise pointed out that “since 2004, the company no longer actively marketed and sold its pension plans to the public due to the mounting indifference of the public to pre-need companies which was caused by the CAP, Platinum Plans and Pacific Plans problems.”
During those times, “Primanila decided to diversify by putting-up other businesses and by investing in other undertakings,” Madrid said.
Madrid likewise said since December 2006, the firm’s trustee bank no longer released part of its trust fund for payment of maturing obligations, forcing Primanila to use its operating funds to pay down maturing debt.
Primanila also pointed out that the CDO does not cover the PNP account, thereby their refusal to remit payments would put the status of their pension plans in jeopardy. “If they refuse to remit their premium payments, they do so at their own peril. Primanila will have no recourse than to consider their plans as “lapsed plans,” Madrid said.
Primanila likewise stressed that the company did not under-declare its collections from the PNP.
The SEC, however, said based on the monthly reports submitted by Primanila, the pre-need firm stated it collected only P302,081 from January to September 2007 but the remittance report of the PNP showed that it remitted P1.69 million during the period.
Primanila likewise explained that the closure of its office was due to its failure to pay monthly dues to the condominium corporation and that its planholders were properly notified of the closure as they continue to get in touch with their clients at a temporary office in Pasong Tamo in Makati.
“Primanila continues to operate and is exerting all its efforts to collect the money of the planholders from its trustee bank for payment to the planholders. They are aware of their mandate and their obligations to the public and they do not plan on reneging on their obligation,” Madrid said.