SEC Adm. Case No. 02-09-104 Edge Ece Review Specialists, Inc.

Republic of the Philippines SECURITIES AND EXCHANGE COMMISSION SEC Bldg. EDSA, Greenhills, Mandaluyong City

IN THE MATTER OF

EDGE ECE REVIEW SPECIALISTS INC. For: Revocation of Corporate SEC Admin Case No. 02-09-104 Registration

DEPARTMENT, COMPLiANCe And eNFOrCEMENt Petitioner.

DECISION

For consideration of the Commission En Banc is the Petition for Revocation of Corporate Registration of respondent Edge ECE Review Specialists, Inc. C`Edge ECE

Incorporation ('AOI') for purposes of registration, in violation of Section 6(l)(1) of for brevity) dated 13 February 2009, filed by the Compliance and Enforcement Departmenti.("CED" for brevity) on the ground of filing a falsified Articles of Presidential Decree No. 902.A, as amended.

FACTS OF THE CASE

Petitioner CED is the department of the Commission mandated to file petitions for revocation of certificates of registration for violation of the Securities Regulation Code (`SRC", the Corporation Code, P.D. 902-A as amended, including their Implementing Rules and Regulations, and such other relevant laws enforced by the Commission.

Edge ECE is a corporation duly registered with the Commission on 30 April 2004 under SEC Registration No. CS200406761 with principai office at Room 502 Donia Amparo Building, Cataluna corner Espana, Sampaloc Manila.2

This petition stemmed from a complaint-affidavit3 filed by a certain Dominador S. Pagbilao with the CED on 09 July 2008 alleging, among others, that five (5) out of the seven (7) incorporators were minors at the time of Edge ECE's incorporation. Attaching the certificates of live birth as evidence, Pagbilao asserts

2 Edge ECE's Articles of Incorporation dated 28 April 2004. 1 Now'known as the Enforcement and Prosecution Department. 3 Annex "C" of the Petition.

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Cathiynne s. Yu, Martin Roncarlo S. Yu, and Smart Nikole S. Yu are all of legal age at the time of its incorporation. that Edge ECE employed misrepresentations to obtain its certificate of registration by declaring that incorporators Arcey Cayronne S. Yu, Charmy Camille S. Yu, Shiny

who was also a professor at the said college aside from being an incorporator of to enroll at Edge ECE under pain of getting a failing mark. Pagbilao averred that as Dean of the University of the East ("UE')-College of Engineering, he received numerous complaints from students against Ronnie M. Yu, Edge ECE. He further stressed that students under Ronnie M. Yu were being forced On 11 August 2008, a conference was conducted by the CED wherein

Quinones, counsel for respondent: Edge ECE submitted a copy of the marriage contract of spouses-incorporators Ronnie M. Yu and Carlota s. Yu, parents of the alleged minor incorporators. During the hearing, spouses-incorporators Yu admitted that the five (5) incorporators were "indeed minors and were legally incapacitated to enter into such articles of incorporation." In a succeeding conference held on 02 October 2008, Bienvenido N

that it was in "honest belief and good faith" that Ronnie M. Yu inciuded his minor children as incorporators. It was further stated that Yu was never assisted by counsel at the time of Edge ECE's application for registration and it was only before the Commission through the CED that he learned that his minor children were not same memorandum that on 22 November 2008, the Board of Directors, in a meeting called for the purpose, removed from the list of stockholders and Board of Directors the minor children of Ronnie M. Yu. qualified to be Edge ECE's incorporators. To cure the defect, it was also stated in the In a Memorandum' dated 22 November 2008, respondent Edge ECE averred

instant petition for the revocation of corporate registration of Edge ECE. On 18 February 2009, the CED, on the basis of its own findings, filed the

ISSUE

The soie issue to be resoived in this case is whether or not there is a sufficient ground to revoke Edge ECE's certificate of registration.

We rule in the affirmative.

Upon the Order of the Commission for Edge ECE to file its answer to the

5 Summary of Proceedings/Conference dated 02 October 2008, attached as Annex "H" of the Petition. 4 Annex "D" of the Petition.

7 Board Resolution No. 01-08 dated 22 November 2008. ' Annex "I" of the Petition.

In the Matter of Edge ECE Review Specialists, Inc. SEC Admin. Case 02-09-104 Page 3 of 6

on the basis of the petition and records at hand. Petition, respondent corporation has yet to file the same. Thus, pursuant to Section 3-128 of the 2006 Rules of Procedure of the Commission, Edge ECE shall be considered as in default. As a'consequence, the Commission shall render judgment

We now resolve the case on its merits

qualifications of incorporators, to wit: Section 10 of the' Corporation Code ('Code" provides for the number and

than fifteen (15), ali of legal age and a majority of whom are Any number of natural persons not less than five (5) but not more residents of the Philippines, may form a private corporation for stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation." (emphasis supplied) any lawful purpose or purposes. Each of the incorporators of a "sec. 10. Nurmber and Qualifications of Incorporators.

first directors of Edge ECE with their respective addresses, nationalities and number of shares subscribed are as follows: As stated in its Articles of Incorporation, the names of the incorporators and

Arcey Cayronne S. Yu Shiny Cathlynne S. Yu B-3 Lt. II Saint John Villas, Martin Roncarlo S. Yu Charmy Camille S. Yu Smart Nikole S. Yu NAME B-3 Lt. II Saint John Villas, B-3 Lt. II Saint John Villas, B-3 Lt. Il Saint John Villas, Ugong Valenzuela City, Metro Manila Ugong Valenzuela City, Metro Manila Manila Ugong Vaienzuela City, Metro Ugona Valenzuela City, Metro Manila Manila B-3 Lt. II Saint John Villas. Ugong Valenzueia City, Metro ADDRESS NATIONALITY Filipino Filipino Filipino Filipino Filipino SHARES NO. OF 8 8 8 8

3 SEC. 3-12. Effect of Failure to Answer. If the respondent fails to answer the complaint within the proceed to render judgment granting the complainant such relief as the complaint may warrant, unless abovestated period, he shall be considered as in default. The Hearing Panel or Officer shall, motu proprio. the Hearing Panel or Officer determines that the complainant should be required to submit ex parte

9 Batas Pambansa Big. 68 (1980). additional evidence

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Cariota S. Yu Ronnie M. Yu B-3 Lt. II Saint. John Villas, Ugong Valenzuela City, Metro B-3 Lt. II Saint John Villas, Manila Ugong Valenzuela City, Metro Manila Filipino Fitipino 352 8

confirming such fact of minority. Based on their Certificates of Live Birth the said incorporators at the time of incorporation are summarized as follows: Cayronne S. Yu, Charmy Camilie S. Yu, Shiny Cathiynne S. Yu, Martin Roncarlo S. Yu and.Smart Nikole S. Yu at the time of Edge ECE's incorporation were conclusively by the admission of spouses-incorporators Ronnie M. Yu and Carlota S. Yu authenticated by the National Statistics Office, the respective. birthdates and ages of established by the certificates of live birth of the concerned incorporators and also From the records, it appears that the minority of incorporators Arcey

Smart Nikole S. Yu Charmy Camille S. Yu Shiny Cathlynne S. Yu Martin Roncarlo S. Yu Arcey Cayronne S. Yu NAME November 03, 199413 November 13, 198819 August 22, 199112 August 14, 199011 DATE OF BIRTH July 04, 200314 Less than.1 AGE 15 13 12 9

which requires that all incorporators should be of legal age. From the foregoing, there was a clear violation of Section 10 of the Code,

constitutes fraud, which may be a ground for the revocation of a comoration's The act of knowingly employing an incapacitated person as incorporator

certificate of registration. Section 6(i)(1) of Presidential Decree No. 902-A, as amended, provides for the power of the Commission to revoke a corporation's certificate of registration, to wit:

the Commission shall possess the fotlowing powers: "sEC. 6. In order to effectively ?xercise such jurisdiction,

X X X

10 Annex "E" of the Petition. 11 Annex "F" of the Petition. 12 Annex "G" of the Petition. 13 Annex "J" of the Petition. 14 Annex "K" of the Petition.

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

registration; 1. Fraud in procuring its certificate of

x x x"(emphasis supplied)

was in honest belief and good faith that Ronnie M. Yu included his minor children as incorporators of Edge ECE. Yu further reiterated` that he was never assisted by counsel at the time he applied for the Edge ECE's corporate registration. In its Memorandum filed with the CED, respondent Edge ECE, contends that it

serving. For one, it is clearly indicated in respondent's AOI that the undersigned incorporators are all of legal age and voluntarily agreed to form respondent time she purportedly signed the same on 28 April 2004? Verily, it may be concluded that the signature appearing in the AOI above the name Smart Nikole S. Yu was written by another person. corporation under the laws of the Republic of the Philippines. Taking into account Ronnie M. Yu's level of education as a licensed engineer and a professor at the UE College of Engineering, he is presumed to have been fully aware of the requirement that all incorporators should be of legai age. Furthermore, how can incorporator Smart Nikole S. Yu sign the AOI when in fact she was barely one (1) year old at the However, we find respondent Edge ECE's contention as rather weak and self-

thereto, the Corporation Code requires the incorporators to be of legal age.17 that unless sanctioned by'statute, a minor cannot become one of the incorporators Philippine jurisdiction, minority restricts the capacity to act.1 Similarly, under Article in forming a corporation for he is not capabie of making a binding contract.15 In 1380 of the same Civil Code of the Philippines, minors cannot give consent to a contract and any contract entered into by them are voidable or annullable even though there may have been no damage to the contracting parties. Corollary Incorporators must have the capacity to contract, hence, it necessarily follows

of stockholders and of repiacing them from the Board of Directors do not cure the More so, respondent's acts of removing the minor incorporators from the list

defect in its incorporation for the reason that at the time of its incorporation, five (5) Code. of its incorporators were minors, clearly in violation of Section 10 of the Corporation

At the outset, it may be deduced that there was an apparent intention to

15 2 Fletcher Cyc. Corp. 1983 Revised Volume, Sec. 83. 17 Corporation Code, Sec. 10. 16 Articie 38 of the Civil Code of the Philippines.

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such AOI was fraudulent, the CRMD would not have approved Edge ECE's deliberately concealed the minority of his children to ensure the approval of Edge commit fraud.. There is sufficient evidence that incorporator Ronnie M. Yu submitted by respondent Edge ECE as part of its registration requirement, shall be regarded as spurious and frauduient. Had it been known to the Commission that application for registration. EcE's application for registration. Consequently, the sworn articles of incorporation

violation of Section 6(I)(1) of P.D. 902-A, as amended. Thus, the revocation of the certificate of registration of Edge ECE is warranted. concealing the 'minority of severai of its incorporators constitutes fraud thereby facilitating the approval of respondent's application for registration, there was a clear From the foregoing, and after having established that respondent's act of

Corporate registration of Edge ECE Review Specialists, Inc. is hereby REVOKED. WHEREFORE, premises considered, the Petition is hereby GRANTED. The

Monitoring Department for its appropriate action, as well as to the Economic Research and Information Department and the Commission's extension offices for dissemination to the general public. Let a copy of this Decision be furnished to the Company Registration and

SO oRdERED.

Mandaluyong City, 24 June 2010.

PE B. BARIN 21.ba

Chairperson

MA.J1An CUET RAuL J. PALABRICA

Commissioner Commissioner

M Manuel HuBerto B. Gaite Commissioner EVADIO M. JALA Commissioner

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