SEC Adm. Case No. 08-10-210 Fortunegate Holiday Philippines, Inc.

Republic of the Philippiries Securities and Exchange Commission

SEC Bldg. EDSA, Greenhills, Mandaluyong City

Articles of Incorporation of PHILIPPINES, INC. In the Matter of the Correction of the FOrtuneGAtE HoLidAY Petitioner-Appellant. For: Appeal to the Commission En Banc SEC En Banc Case No. 08-10-210

DECISION

Company Registration and Monitoring Department's (CRMD) 29 July 2010 Order denying the corporation's pet:tion for correction of its Articles of Incorporation. This refers to the appeal of Fortunegate Holiday Philippines, Inc. from the

Incorporation erroneously state that Pauio Ho was one of the stockhoiders holding truth is that Alberto To was the one who subscribed to the shares of stock that were erroneously registered in Paulo Ho's name. Class B Preferred Shares. The corporation explains that the erroneous inclusion of Paulo Ho was due to the inadvertence of its lawyer who drafted the Articles. And, The corporation alieges that the Eighth and Ninth Articles of its Articles of

The corporation thus petitioned the CRMD to allow the correction of the Articles by substituting the name of Alberto To in piace of Paulo Ho. In support of its petition, the corporation submitted: (1) Affidavit dated 21 May 2010 of the nominee stockholders stating that Alberto To was their principal; (2) Alberto To's Affidavit stating that he subscribed to 21,000 shares including the 20,995 Class B Preferred shares registered in Paulo Ho's name; and (3) a Certification from the corporation's secretary stating that it was Alberto To who subscribed to the 20,995 Class B Preferred shares.

On 23 June 2010, the corporation received from the CRMD a Subpoena directing the corporation to submit an Affidavit by Paulo Ho verifying the alleged mistake in the Articles.

In Re: Cofrection of the Articles of inc oiporation of FORTUNEGATE HOLIDAY PHILIPPINES, INC Sec En Banc Case No. 08-10-210 Decision Page 2 of 3

the CRMD issued the assailed 29 July 2010 Order denying the petition for correction. corporation 'was only able to submit its General Information Sheet and a certified true copy of its stock and transfer book as further evidence in support of its shares. Finding the corporation's submission insufficient to prove the alleged error. allegation that Alberto To was indeed the owner of the 20,995 Class B Preferred However, the corporation failed to comply with the Subpoena. T e

The appeal has no merit. We find no error with the CRMD's Order.

serving, and cannot be given much credence. Also, the incorporator's Affidavit contents of the Articles of Incorporation, which they earlier executed, and corporation in support of its petition are still insufficient to overcome what is expressly stated in the assailed Articies. Alberto To's Affidavit is obviously self- cannot be given much probative value since it is in the nature of a retraction of the acknowledged before a notary public as their free and voluntary act. We agree with the CRMD that the various documents submitted by the

are. prima facie evidence only,f and certainly cannot prevail over the corporation's the stock and transfer Book, and other such corporate records are not conclusive but charter -- the Articies of Incorporation. This doctrine is well settled, and was in fact applied by the Supreme Court in the case of Lanuza v. Court of Appeals,2 where the Court ruled that the Articles of Incorporation prevails over the company's stock and transfer book and other such corporate recoras in determining the stockholders shareholdings. Further, the corporate secretary's certificate, the General Information Sheet,

The Articles of Incorporation defines the charter of the corporation and the The fundamental quality of the Articles of Incorporation cannot be gainsaid.

contractual relationships between the State and the corporation, the stockholders and the State, and between the corporation and its stockholders. The contents of the Articles of Incorporation are binding, not oniy on the corporation, but also on its sharehoiders. Such is the importance of the Articles of Incorporation that its correction should not be taken lightly.

This is especially true in the present case where the corporation's petition is not merely for the correction of a manifestiy clerical or innocuous error. The desired change in the Articies will affect substantial rights, particularly that of subscription/ownership over the shares. To change the entry in the Articles from Paulo Ho to Alberto To resuits in change in ownership of property. Thus, the Commission must exercise extreme caution in granting such petitions lest it results in undue deprivation of property

2 GR No. 131394, 28 March 200S 1 Bitong v. Court of Appeals, 354 Phil. 516, 536 (1998).

FORTUNEGATE HOLIDAY PHILIPPINES. INC. Sec En Banc Case No. 08-1 0-210 In Re: Correction of the Articles of incorporation of Decision Page 3 of 3

to satisfy this constitutional requirement by directing the corporation to present an affidavit from Paulo Ho regarding the supposed error in the Articles. However, the Articies without potentially infringing on his property rights. person affected be given due process of law, i.e. notice and hearing. The CRMD sought corporation failed to satisfy this requirement. Absent positive proof that Paulo Ho was afforded notice and hearing, the Commission cannot allow the desired correction of the In cases resulting in deprivation of property, the Constitution requires that the

for Paulo Ho, and it undertakes to submit his Affidavit as soon as he is contacted. However, we note the corporation's statement that it is continuously searching

merit. This is without prejudice to petitioner-appellant initiating another petition for correction of its Articles at a future time when it is able to secure Paulo Ho's Affidavit. WHEREFORE, premises considered, the Appeal is hereby DENIED for lack of

SO ORDERED.

Mandaluyong City, Philippines, 26 August 2010.

PE B. BARIN Io $. ba Chairperson

Ma. JuaNita E. cueti Commissioner RAUL J. PALABRICA Commissioner

MaNuel HUBertO B. GAItE Commissioner ELADIO N Commissioner ALE