SEC Adm. Case No. 05-10-116 Talbot and Reese, Inc.

Securities and Exchange Commission SEC BIdg., EDSA Greenhills, Mandaluyong City Republic of the Philippines Department of Finance

IN THE MATTER OF: Talbot and reese, Inc.

SEC Admin Case No. 05-10-116 For: Revocation of Corporate Registration

PROSECUTION DEPARTMENT, ENFORCEMENT AND

Petitioner.

DECISION

Registration ("Petition," for brevity) of Talbot and Reese, Inc. ('Respondent," for brevity) filed by petitioner Enforcement and Prosecution Department ("EPD," for brevity) of the Commission on 26 May 2010. For consideration is the instant Petition for Revocation of Corporate

the procurement of its certificate of .registration consisting of use of fictitious of Presidential Decree No. 902-A ('PD 902-A," for brevity), as amended, for fraud in addresses for its incorporators. The Petition is anchored on Respondent's alleged violation of Section 6(I)(1)

the Petition, Summons and Order for Publication, in a newspaper of general submitted its Compliance2 with the same. circulation and for posting thereof on the SEC website. On 12 October 2010, the EPD In an Order dated 31 May 2010, the Commission ordered the publication of

in the instant case. To date, the Corporation has not filed its Answer or any responsive pleading

1 SEC Reg. No. CS200703153, and registered with the Commission on 28 February 2007. 2 Dated 11 October 2010.

Page 2 of 7 In the Matter of. Talbot and: SEC Admin Case No. 05-10-116 eese, Inc.

FACTS OF THE CASE:

sent via email, from various individuals addressed to the EPD3 over the period of 2007-2008. These correspondences were from the foliowing: The instant controversy arose from four (4) different letter-complaints, all

1) A certain Tham Tze Wayn, in an email dated 02 April 2007, wrote that he had been contacted by a venture capitalist company allegedly based in the Philippines, Talbot and Reese, which he believes to be a scam. In his email, he narrated that he was informed that the Respondent was trying to raise money for an initial public offering for brevity) where the return on investment offered was ridiculously two (2) e-mails which he received from a certain Kurt Daniels, Account ('IPO") for a company. called Tricoastal Oit and Gas Ltd. ("Tricoastal," Executive of the herein Respondent. high in a short period of time. Tham Tze Wayn attached to his emait

2) A certain Giacomo Orlandi, in an email dated 11 April 2007, submitted two (2) facsimiles from a certain Beatrice Gonzales, representing would be a buyout situation, where "(e)ither outcome would represent herself to' be an Account Executive of the Respondent. Gonzales recommended that Orlandi invest in Tricoastal, since the company either anticipates to list on an Asian Stock Exchange or that there a substantial return on investment dollars."

3) A certain Felicia Yau, in an email dated 26 June 2008, alleged that the Respondent had contacted her in June 2007, promising her a return of her money and was informed that to avail of an earlier payout or Respondent's . institutional' client, Oxfam International. Oxfam International informed Yau that it had no' dealings with the and claimed that there were other victims from Singapore, Norway. 150% on her investment, and that she began buying shares in recovery of her investment, she would have to buy shares from the Corporation. Yau alleged that she had lost in total about US$250,000 (two hundred fifty thousand US dollars) from investments in Tricoastal, Belgium, and South Africa. Tricoastal. Eventually, when the deal fell through, Yau tried to recover

4) Finally, a certain Dui Sian Ling, a Singaporean, in an email dated 24 June 2008, likewise complained that he and a group of Singaporeans thousand US dollars) by the Respondent, which likewise informed him had been "conned" to invest close to US$500,000 (five hundred

3 Records, pp. 16-23.

In the Matter of Talbot and Reese, Inc. SEC Adrhin Case No. 05-10-116 Page 3 of 7

that it was already under receivership and operating under the Davis Mayer Group ('DMG.

address of the Respondent "at Unit 5E-1, 5th"Floor, Burbank Tower 3, California Incorporation. However, Arngei c. Basconcillo, the security guard employed by Gardens Square, Mandaluyong City (`Burbank address">, as stated in its Articles of Megaforce Security and detailed at Burbank Tower 3, and Mrs. Adelaine Dans, the the said address.' Meanwhile, Respondent entered into a Contract of Lease5 dated present tenant of the condominium unit, stated that the Corporation never occupied Pio Del Pilar, Makati City ('Cityland address'?, effective on 01 March 2007, or the day after the issuance of its certificate of registration by the Commission. 23 March 2007 over Unit 218 Cityland Pasong Tamo located at 6264 Calle Estacion Acting on these complaints, the investigating team first visited the office

incorporators of the Respondent, and procured the relevant barangay certifications. To wit: The investigating team then verified the truthfulness of the addresses of the

SUMMARY OF THE FINDINGS OF THE INVESTIGATING TEAM OF THE EPD

Talberto B. Santiago Noellanosa Jan Moran Respicio Liberty O. Santos Veliganio Woodnell Name William A.[Filipino C. P. Filipino Nationality Filipino Filipino Filipino Unit 5E, th Floor, Burbank 409E. Rodriguez Ave., Cubao 1379 San Gregorio Gardens Heights, Cainta, Rizal Antipoto City Paco, Manila Mandaluyong City 43Yakal Tower 8 Greenheights, Address Lavander 3 St. Newtown, California Palmera No Square, St. St. Nota.known Notaknown Not a resident address1 resident, address resident, address resident10 Non-existent does not exist? does not exist person Certification Barangay longer and a

Records, 14-15. 5 Id., 6-13. T Id., 3. 8 Id., 4. 9 Id., 2. 11 Id., 5. 6 Id., 1-5. 10 Id., 1.

In the Matter of. Talbot and SEC Admin Case No. 05-10-116 Page 4 of 7 Ieese, Inc.

addresses. that are non-existent and/or fictitious. Two (2) of the incorporators supplied valid addresses but upon investigation, they were not residents thereof. Likewise, when the EPD sent notices of conference to the incorporators in connection with the instant case, these returned to sender because either the address was unknown or there was no known person residing at the said address. The investigating team found that three (3) of the incorporators used

intent on the part of TALBOT and its incorporators to commit fraud against the SEC and the public."12 alleging that "the fictitious addresses used by the incorporators in the Articles of Incorporation is more than a mere coincidence. Rather, it manifests the malicious Based on the foregoing findings, the EPD initiated the instant petition,

ISSUE:

Respondent should be revoked based on fraud in the procurement of its registration. The sole issue for consideration is whether or not the corporate registration of

RULING:

The petition is impressed with merit.

Section 6(i)(1) of PD 902-A, as amended provides:

jurisdiction, the Commission shall possess the following powers: "Section 6. In order to effectively exercise such

hearing, the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law, including the following: 1) To suspend, or revoke, after proper notice and

1) Fraud . in registration. xx" procuring its certificate of

12 Records, 45.

SEC Admin Case No. 05-10-116 In the Matter of Talbot and Reese, Inc. Page 5 of 7 X

the charter of alcorporation and its relations with the State, to which it owes its purely dependent on its will.3 privilege of license to exist. A corporation "owes its life to the state, its birth being A corporation's Articles of Incorporation is in essence the document defining

the corporation."14 consents to bel bound. It measures and determines the stockholder's rights obligations and liabilities, and also the nature and extent of the powers conferred on A corporation's charter "evidences the agreement by which a stockholder

incorporators of a corporation are required by law to be stated in the Articles of Philippines15 ('Code," for brevity) the names, nationalities and residences of the free, voluntary act and deed of the incorporators therein.16 The statement of the Incorporation, and the same is likewise acknowledged before a notary public as the Philippines as mandated by Section 10 of the Code. The requirement gains more act as the first set of directors, may be held personally liable for certain acts or omissions under Section 3117 of the Code. residences is required to show that majority of the incorporators are residents of the significance in light of the fact that the incorporators, who, as in this case, usually It cannot be over-emphasized that under the Corporation Code of the

corporation can jbe issued its certificate of registration.13 By the same token, the same certificateof registration can be suspended or revoked if the Commission Commission to be in accordance with the requirements under the law before a determines that there was fraud attendant in the procurement of the same. The Articles of Incorporation must then be evaluated and approved by the

Incorporated vs. Nonesio Rivera, SEC Case No. 02-94-4869 (December 26, 1995): As previously ruled by the Commission in the case of Urban Poor of Pasig

subparagraph 1 of P.D. No. 902-A as amended as one of the grounds for revocation of a certificate of registration of a "(T)he fraud mentioned in Section 6, paragraph I. corporation,: partnership or association refers to fraud

13 Tayag vs. Benguet Consolidated; Inc. 26 SCRA 242 (1968) at 242, cited in C.L. Villanueva, 14 Fletcher Cyc. Corp. (Voi. 7A) 3634, 224, citations omitted. 15 Batas Pambansa, Blg. 68 (1980). 18 See Sec. 17 of the Code. Philippine Corporate Law (2010 edition), at 12. 16 See Sections 11, 14 and 15 of the Code. 17 "SECTION"31.Liability of directors, trustees or officers. Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary persons.xxx

SEC Admin Case No. 05-10-116 In the Matter of Talbot and Page 6 of 7 ese, inc.

attendant in the registration of the corporation, partnership. with the documents and/or papers presented to this Commission for the registration of the said corporation. partnership or association." or association and the same must be contained or connected

operations and perpetration of investment scams, it appears that fraud was perpetrated in the procurement by the Respondent of its corporate registration. While the instant case originated from the complaints of alleged "boiler room"

Incorporation. Based on the barangay certifications issued respectively, the incorporators Talberto B. Santiago, Respicio A. Noellanosa and' Woodnell c. the notarial acknowledgment, these same incorporators appeared before the notary exerted by the incorporators to make their addresses appear valid and legitimate. Articles of Incorporation of Respondent would not have been approved. Veliganio stated non-existent addresses in the Articles of Incorporation. Worse, in therein. The intent to defraud the Commission is evident, considering the efforts Had the Commission known that the incorporators used fictitious addresses, the public and presented their respective residence certificates, as proof of residence Three (3) of the incorporators used fictitious addresses in the Articles of

contract of lease over the Cityland address -- i.e., the date of effectivity of the contract a day after the registration of Respondent, together with the investigation report19 that Respondent"never occupied its Burbank address, indicate that Respondent had no intention to. conduct a legitimate business. Respondent ostensibly used its principal office, i.e. its Burbank address in its dealings merely to give the impression of legitimacy of its operations to the investing public. In addition, the circumstances surrounding Respondent's aforementioned

priority than that of its creator."0 is logically inconceivable therefore that it will have rights and privileges of a higher existence until it has received the imprimatur of that state acting according to law. It "A corporation as known to Philippine jurisprudence is a creature without any

the appropriate sanctions must be imposed. the registration of a corporation for fraud in procuring the same, the Commission thus holds that Talbot and Reese, Inc. violated Section 6(I)(1) of PD 902-A for which Pursuant to the statutory authority of the Commission to suspend or revoke

2o Tayag vs. Benguet Consolidated, Inc. 26 SCRA 242 (1968) at 242, cited in C.L. Villanueva, Philippine Corporate Law (2010 edition), at 12. 19 See Note 4, supra.

SEC Admin Case No. 05-10-116 Page 7 of 7 In the Matter of Talbot and K ese, inc

AND REESE, INC. (SEC Reg. No. CS200703153) is hereby REVOKED. WHEREFORE, premises considered, the Certificate of Registration of TALBOT

Monitoring Department for its information and appropriate action. Let a copy of this Decision be furnished the Company Registration and

Information Department and all the extension offices of this Commission for dissemination to the general public. Lastly, let copies of this Decision be furnished the Economic Research and

SO oRdERED.

Mandaluyong City, 16 February 2012.

T v

TERESITA J. HERBOSA Chairperson

MA. JUAnItAe. CUBtO Commissioner mL9Lw RAUL J. PALABRICA Commissioner

MANUEL H Commissioner To B. GAItE ELADIO M. JAL /Commiss ioner- WX