Nirankar Lending & Ent. Co.

In the matter of NIRANKAR LENDING & ENT. CO. Enforcement and Prosecution Department SEC Administrative Case No. 01-12-141 Page 4 of 4 Petitioner desist order pursuant to Section 5.1 (i) of Republic Act No. 879911 against Nirankar is warranted under the foregoing circumstances. partners, officers, representatives, agents, conduits, assigns, and. any and all persons claiming and acting for and in behalf and under their authority, are hereby ordered to immediately CEASE AND DESIST, under pain of contempt, from further conducting business as a lending company. WHEREFORE, premises considered, NIRANKAR LENDING & ENT. CO., its non-extendible period of five (5) business days from receipt of the Order, file a formal request or motion for the lifting thereof with the Commission. All persons against whom this Cease and Desist Order is issued may, within a any, of the respondents; and (c) published in the Commission's website, representatives; (b) posted at the entrance of the main office and/or branches, if Let this..Order be (a) served on the respondents or any of .its authorized i accordance with Sec. 10-6 of the 2006 Rules of Procedure of the Securities and Exchange Co'mmission. : 12-157. Moreover, let this case also bear the docket number SEC Admin. Case No. 05. FAIl NOt uNdER PENALtY OF LAW. SO ORDERED. City of Mandaluyong; 21 June 2012. TERESITA J. HERBOSA Chairperson MA. JuANItA E. CUetO RAUL J. PALABRICA Commis Commissioner MANUEL Commissioner B. GAITE ElaDIg M. JalA Commis$ioner MM 1 . Securities Regulation Code, SEC. 5. Powers and Functions of' the "Commission. Commission shall act with transparency and shall have the powers and functions provided by this Code, Presidential Decree No.. 902-A, the Corporation Code, the Investment Houses Law, the Financing Company Act and other existing laws. Pursuant thereto, the Commission shall have, among others, the following powers and functions: xxx xxx XXX 5.1. The (i) Issue cease and desist orders to prevent fraud or injury to the investing public; xxx xxx. *on sick leave Page 3 of 4 In the matter of NIRANKAR LENDING & ENT. CO. Enforcement and Prosecution Department. SEC Administrative Case No. 01-12-141 Petitioner. said Official Receipt'No. 022-0002374.6 granted a business permit to operate, valid until December 31, 20075, and a copy of Receipt No. 022-0002374 dated 10 February 2011, covering the whole year of 2011 2011. Attached to this letter was a copy of a certification that Nirankar has been City, stating that Nirankar paid their Mayor's. Permit and License under Official On 11 July 2011, CED received a letter from the City Treasurer of Quezon On 25 July 2011, EPD sent a Notice of Conference' addressed to the partners However, the partners failed to appear on the scheduled date of the conference. appear before the Commission. The Notice was received by a certain Catequista, Jr. of Nirankar at the address indicated in Nirankar's business permit, for them to On 15 August 2011, a second Notice of Conference- was again issued, but the partners still did not appear at the conference. August 2011 and served it at 'Nirankar's principal office address. Entries on the Subpoena show that on 31 August 2011, a certain Romy Singh refused to receive EPD then issued a Subpoena Duces Tecum/Ad Testificandum' dated 22 the same when served. On 21:October 2011, investigators from EPD conducted a surveillance operation at Nirankar's principal office address to determine if it .is engaged in Iending activities. Based on the Field Investigation Report. the investigators talked to a certain Jun Catequista, nephew of Ms. Lily Catequista, one of the partners. He ceased its lending operations a long time.:ago, but he failed to mention the exact informed the investigators 'that Ms. Catequista was not around, and Nirankar has period. However, :Nirankar's payment for the Mayor's Permit for the whole year of 2011 is prima facie proof that it engaged in lending. lending is in violation of Section 4 of R.A. 9474, which.mandates all entities engaged Nirankar's continued existence as a partnership with the primary purpose of a in lendinig activities or business to incorporate as a stock corporation aind to secure a Nirankar without compliance with the requirements under R.A. 9474"may cause Certificate of Authority from the Commission. Thus, the continued operation of injury or fraud to the investing public. Accordingly, the issuance of a cease and 9 Annex "H" of the Petition. 10 Annex "I" of the Petition. 4 Annex "E" of the Petition 5 Annex "E-1" of the Petition. 6 Annex "E-2" of the Petition. 7 Annex "F" of the Petition. 8 Annex "G" of the Petition. In the matter of NIRANKAR LENDING & ENT. CO. nf Prosecution Department SEC Administrative Case No. 01-12-141 Page 2 of 4 Petitioner. V likewise, borrowing shall be sourced or derived from not more than nineteen under R.A. 5980 as amended, nor pawnbroking activities under P.D. 114, and (19) lenders wares and merchandise which are or may become the commerce of man."? at a wholesale basis only, importing, exporing, and dealing all kinds of good To carry on a general mercantile and commercial business of trading complying with: the' minimum capital requirement of one million pesos Regulation Act of 2007 (R.A. 9474), was passed and signed -into law mandating that all companies engaged in lending activities or business shall organize as a stock corporation and secure a Certificate of Authority from the Commission after (Php1,000,000.00), among:others. Section 4 of said law states that: On 22 May 2007. Republic Act No. 9474, also known as the Lending Company investors organized as sole proprietorships or partnerships shall be disallowed from engaging in the business of granting loans to the pubiic one year after the date of effectivity of this Act. established only as a corporation: Provided. that existing: .lending "Section 4. Form of Organization. - A Iending company shall be authority to operate by the SEC." (Emphasis supplied.) No lending company shall conduct business .unless granted an requires existing lending companies organized as partnership, as in the case of Nirankar, to organize itself as a stock corporation within a period of one year from the effectivity of the law, viz: Rule 3 (a) (i) of the Implementing Rules and Regulations of R.A. 9474 lending company shall be established as a stock corporation. "RULE 3. Requirements for Organization - (a) Form of Organization - A Existing LendingCompanies organized as single secure a Certificate of Authority to operate a lending company. Otherwise. corporation with the minimum capitalization prescribed under the Act and they shall be disallowed from engaging in the business of granting loans to the public. xxx.xxx xxx" (Emphasis supplied.) from'the effectivity of the Act, organize themselves as a stock proprietorships or partnerships shall, within a period of one (1) year permit, as well as its supporting documents.3 Treasurer of Quezon City, requesting for a certified true copy of Nirankar's business (CED'2, which eventually became the EPD, sent a letter to the Office of the City On 23 June 2011, the Commission's Compliance and Enforcement Department 2 Ibid. 3 Annex "D" of the Petition. SECURITIES AND EXCHANGE COMMISSION SEC Bldg. EDSA, Greenhills, Mandaluyong City Republic of the Philippines EN BANC In the matter of NIRANKAR LENDING & ENT. CO SEC CDO Case No. 05-12-005 SEC Admin. Case No. 05-12-157 DEPARTMENT: ENFORCEMENT AND PROSECUTION Petitioner. ORDER & ENT: Co. (:Nirankar') filed by the Enforcement and Prosecution Department Petition For RevOcation of. the Certificate of Registration of NIRANKAR LENDING ("EPD" of the Commission. This resolves the prayer for the issuance of a Cease and Desist Order in the as a mere CDO case, hence,the docket number SEC CDO Case No. 05-12-005: as an SEC administrative case. However, the Petition is primarily for Revocation, and as such, should be docketed At the outset, it should be noted that the Petition was erroneously docketed The relevant facts are narrated below. under SEC Registration No. A199723371.1 As indicated in its Articles of Partnership, Nirankar has the following purposes: Nirankar is a partnership duly registered with the SEC on 11 December 1997 :the business of a lending investor. lending money to persons and entities Philippines, provided that the company shall not engage in financing activities under the terms and"conditions allowed by the laws of the Republic of the "That the purpose.for which said company is formed is. to engage in 1 Annex "A" of the Petition.