SEC wins case vs lending company officers

The Securities and Exchange Commission (SEC) has successfully prosecuted a falsification case against officers, directors, and shareholders of a lending company who were found to have submitted falsified documents for registration with the Commission.

In a decision dated March 8, 2023, the Pasay Metropolitan Trial Court Branch 47 found nine incorporators and officials of Phil86 Gurunanak Lending and Trading Corp. (Phil86) guilty beyond reasonable doubt of violating Article 172 (1) of the Revised Penal Code (RPC), providing penalties for the Falsification of Public Documents by a Private Individual.

The accused, namely Nicanor Borong Jr., Nelson L. Henson, Irene T. Romero, Michael R. Ligaray, Regina S. Elizon, Gurjant Singh, Harnaib Singh, Tarsem Singh Daliwal, and Gurmeet Kaur Kaila, were sentenced to each suffer imprisonment of up to two years and six months of imprisonment and were also ordered to pay a fine of P100,000 each, or a total of P900,000. The Trial Court, however, has allowed the accused to file appropriate remedies under applicable rules to contest the decision.

The SEC filed the criminal case against the accused incorporators, directors, and officers of Phil86 after finding irregularities in the Certificate of Bank Deposit that they submitted for the registration of the Lending Company with the Commission.

The Certificate of Bank Deposit was made supposedly in compliance with Republic Act No. 9474, or the Lending Company Regulation Act, which prescribes a minimum paid-up capital of P1 million for lending companies.

The SEC Company Registration and Monitoring Department (CRMD) found that the bank certificates submitted were falsified upon their verification with the bank.

Article 172, Paragraph 1 of the RPC provides that any private individual who commits falsifications in any public or official document or letter of exchange or any other kind of commercial document shall incur a penalty of two years, four months and one day up to six years.

“[T]his Court finds that [the] accused… as directors, officers, stockholders, and incorporators, signed the documentary requirements to the SEC knowing fully well that included among the requirements therein is a notarized bank certification of their paid-up capital,” the court held.

“They knew that the same is a requirement and that they stand to benefit therefrom as it is a documentary requirement for the corporation they seek to form…without satisfactory explanation, the Court hereby finds that they are liable as the forgers of the falsified bank certificate.”

As part of the government-initiated crackdown against illegal lenders engaged in a “5-6” scheme and other usurious practices that started in 2016, the SEC remains vigilant over the registration and operations of lending and financing companies.

The SEC has since secured the convictions of 74 individuals for violation of the LCRA. In 2021, the Commission also saw the conviction of the officials of lending companies Naurasidhu55 and X-CEE789 Lending and Trading, Inc. for violating the LCRA, after falsifying their registration documents.

The SEC, through the Corporate Governance and Finance Department (CGFD), has already revoked the primary registration of a total of 2,084 lending companies for non-compliance with the LCRA. It has also revoked the secondary license of 39 lending/financing companies due to various violations of SEC rules and regulations.

Currently, the Commission is actively prosecuting 375 individuals in 56 cases for violations of Republic Act No. 8799 or the Securities Regulation Code, and three cases for violations of the RPC.

With the successful conviction, the SEC warns the public to be careful in their submissions and be truthful in all their declarations.”