SEC Adm. Case No. 06-10-202 PSMAQ Transport Association Inc.

Republic of the Philippines Securities and Exchange Commission

SEC Bldg. EDSA, Greenhills, Mandaluyong City

PSMAQ TRANSPORT ASSOCIATION. INC. represented by MR. ROLANDO BONIFACIO, Complainant-Appellant, SEC En Banc Case No. 06-10-202 (SEC CRMD Case No. 09-98)

- versus

RoMel H. tanala MILO d. LEdESMA ROLAND ALLAN CORPUZ. RAMERO P. BEdURAL, MICHAEL A. SANTIAGO. ARCHIE S. AVILES, FOR: Cancellation of Fraudulent Amended Articles of Incorporation and/or Writ of Preliminary Amended Articles of Incorporation and By-Laws; Reinstatement of Injunction and By-Laws With Prayer for T.R.O.

Respondents-Appellees.

DECISION

Before the Commission is the assailed decision of the Company Registration and Monitoring Department ('CRMD'? of the Commission dated 13 May :2010, the dispositive portion of which states as follows:

"WHEREFORE, premises considered, the instant Complaint is hereby DISMISSED. The parties are advised to bring the intra-corporate controversy before the appropriate Regional Trial Court for resolution."

Complainant-appellant (hereinafter referred to as "Bonifacio group," for clarity) filed its Memorandum of Appeal dated 02 June 2010 assailing the decision issued by CRMD on 13 May 2010. The Commission issued an Order dated 25 June

2010 requiring the Respondents-Appellees (hereinafter referred to as "Tanala

group," for ciarity) to file their Reply-Memorandum. On 02 July 2010, the Tafala

group filed its Reply-Memorandum.

The facts, as alleged by the parties to the case, are as follows:

The Bonifacio group is composed of the original incorporators:of P-MAQ (PSMAQ)i Transport Association, Inc., an association plying the Pasig, Market-

Complainant initiated the amendment of the Articles of Incorporation and By-Laws of the association, which included, among others, a change of name to PSMAQ Transport Association,

Inc. which was approved by the Commission on 06 February 2009. However, respondents subsequently filed their application for amendment of the Articies of Incorporation and By-Laws of the association, which included, among others, a reversion from PSMAQ to the original name of the association to P-MAQ: The amendment application was approved on 06 March 2009 and p-MAQ remains as the current name of 'the association.

PSMAQ Transport Association, Inc. v. Tafala, et al. SEC En Banc Case No. 06-10-202, Page 2 of 6

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Market, Ayala and Quiapo route? whose Articles of Incorporation and By-Laws were

approved on 16 February 2005.3

In their Reply-Memorandum, the Tanala group claimed that the Bonifacio

group never conducted elections from 2005 to 2008. The group initiated a Petition

for Calling of Meeting5 before the Office of the General Counsel of the Commission.

The case was later dismissed' as moot in view of the elections" conducted by the

Tanala group..

The Bonifacio group sought to have the election nullified before the Regional

Trial Court ('RTC'?) of Pasig City and raffled to Branch 158, but their complaint was dismissed for being filed out of time.9 Meanwhile, the Bonifacio group submitted two sets of GIS dated 23 May 200819 and 15 August 200811 to the Commission reflecting two dates of special meetings conducted, namely April 01, 2008 and

August 12, 2008 respectively.

The Bonifacio group's application12 for Amendment of Articles of Incorporation13 and By-Laws 14 was approved on 9 February 2009. One of these amendments include the change of name from P-MAQ to PSMAQ Transport Association. Having learned of the amendments undertaken by the Bonifacio group,15 the Tanala group.filed an application for Amendment of Articles of Incorporation1 and By-Laws17

In view of the 'anticipated amendments, the Bonifacio group wrote to the CRMD twice, first on 12 February 200918 and second on 12 March 200919 requesting

the department not to entertain or accept any submissions by the Tanala group. The

2 The type of vehicle driven is left blank in the Articles of Incorporation dated 15 February,2005. 3 Memorandum on Appeal, Certificate of Incorporation dated 16 February 2005, Annex "B" 4 Complainants assert that respondents were expelled from the association during their special

meeting held on 18 August 2008 (Memorandum on Appeal, Par. 14).

Reply-Memorandum (Order dated 19 June 2008), Annex "13" 5 SEC Case No. 04-08-200.

Among others: Minutes of the Proceedings (Annex "12', Letter to SEC from Respondents dated 19

May 2008 informing the SEC of the election conducted on 18 May 2008 (Annex "9'? and GIS dated 19 May 2008.(Annex "10"). Moreover, both parties admitted that an election was indeed

8 Respondents claim that as a result, the management of Market! Market! issued a certificate of held on the said date.

recoghition to the Tanala-led group, as well as I.D. cards (Annexes "14" and "15").

1o Annex "16,"Reply-Memorandum to the Complainant-Appellant Memorandum on Appeal. 9 RTC Order dated 17 November 2008, Annex "18".

1z Complainants raise the issue of having paid large fines for non-submission of reportorial 11 Annex "17," Ibid.

requirements and violations of the code as specified in Confirmation of Payment of Fines dated 28

1 Certincate Of Fing of Amended Articies of Incorporation, Annex "D" 1 Ibid., (Annex "I" of and' Ibi., (Annex "20". 16 Certificate of Filing of Amended Articles of Incorporation (Annex "H'? of Memorandum on Appeal 18 Ibid., Annex "G." 19 Ibid, (Annex "3"2. 15 Memorandum on Appeal, Par. (d) I4 Certificate of Filing of Amended By-Laws, Annex "E." January 2009 (Annex "F? which they attribute to Respondents as fraudulent submissions. and Annex "19" of Reply-Memorandum.

PSMAQ Transport Association, Inc. v. Tanala, et al. SEC En Banc Case No. 06-10-202, Page 3 of 6

application for amendment of the Articles of Incorporation and By-laws was

approved on 06 March 2009. The amendment included that of changing the name of

the association from PSMAQ to P-MAQ, its originai name, which remains the

corporate name of the association at present.

The CRMD responded20 to the second letter informing the Bonifacio group to

file a petition for cancellation of amendments to the Articles of Incorporation

instead. The Bonifacio group alleged that it even filed a criminal complaint21 for

perjury and falsification against the Tanala group that was allegedly subsequently

dismissed.22

Meanwhile, the Tanala group conducted its second election on 24 May 2009.

The Bonifacio group sought to have the election nullified before the RTC in Pasig City. The Bonifacio group impleaded the CRMD, and prayed for the RTC to order the CRMD to revoke the certificates of Filing' of Amended Articles of Incorporation C'AAI'? and Amended By-Laws ('ABL'? filed by the Tanala group based on the "alleged illegal acts of the SEC in approving the Amended Articies of Incorporation and By-Laws filed by the individual"defendands."23"The CRMD, represented by the Office of the Solicitor General, asserted that the RTC had "no jurisdictiori to order

the revocation and/or canceliation of the certificate of filing of amended articles and

by-laws of plaintiff corporation..n4

The Bonifacio group was successful in having the election conducted by the Tanala group nullified by the RTC in its Decision dated 22 September 2009.

However, with respect to the revocation of the AAI and ABL, the RTC dismissed the

complaint for lack of jurisdiction over the cancellation of the certificates of filing of amended articles of incorporation and by-laws dated 06 March 2009.25 citing Section

5 of Presidential Decree 902-A, the RTC stated: "Nowhere in this enumeration of

adjudicative functions is the revocation of amended Articles of Incorporation or By-

Laws found ... xxx In sum, therefore, actions for revocation of Amended Articles of Incorporation or By-laws, like the instant case, must still be filed before the SEc and this Court has'no jurisdiction over them." 26 (emphasis supplied)

The Tanala group, nonetheless, planned the holding of a special election to be conducted on 05 December 2009 which the Bonifacio group tried to prevent,27 but without success.28 The Tanaia group alleged that it was able to conduct the

23 Docketed as -XV-03-INV-09B-01419 For: Perjury/Falsification (Annex "31"). 23 psMAQ Transport Association., and its members represented by Mr. Ronaldo C. Bonifacio vs. 20 Letter dated 25 March 2009 (Annex "K.") 22 Ibid. Romeo H. Tahala, Milo D. Ledesma, et al. (SEC Case No. 09-120), Regional Trial Court -- Pasig

2s Decision dated 22 September 2009, Annex "M." 27 *Very Urgent Motion for the Issuance of Temporary Restraining Order and Writ of Preliminary 24 Answer in SEC Case No. 09-120 dated 06 July 2009, Par. 38 (Annex "L'7. z% Order of the RTC Branch 158.of Pasig City dated 03 December 2009, Annex "27." 26 bid City, Branch 158, 22 September.2009, p. 2. Injunction dated 01 December 2009, Annex "26."

PSMAQ Transport Association, Inc. v. Tahala, et a!

E + SEC En Banc Case No. 06-10-202, Page 4 of 6

election on 05 December 200929 and that the members of the group were re-

elected.

On 15 March 2009, the Bonifacio group filed a Complaint before the

Corporate Filings and Records Division ('CFRD') of the CRMD for the cancellation of

the Amended Articles of Incorporation and By-Laws dated 06 March 2009 filed by

the Tanala Group. The complaint was dismissed on 13 May 2010'on the ground that

the subject case is intra-corporate in nature.

Hence, the instant appeai.

ISSUE

In the main, the issue to be resolved is whether or not the Amended Articles of Incorporation (AAI) and Amended By-Laws (ABL) approved on 06 March 2009 of the P-MAQ3 association should be revoked.

Among, the Commission's enumerated powers under the Securities and Regulation Code31 is the power to "suspend, or revoke, after proper notice and hearing the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law."32 In this particular instance, the complainant-appellant alleges that there was fraud in the amendments of the Articles of Incorporation and By-Laws obtained by respondents.

Summary of the Alleged Changes in the Articles of Incorporation and By-Laws of

the P-MAQ Association33

Name of AssociationP-MAQ (Article I) Affected articles Principal address and provisions Number of (Article VI) Term of the Board of Purpose (Article II) Trustees Clause Not stated/left blank Association, Inc. 787 J. Pueblo St. Bambang, Pasig City 1 year 5 (Bonifacio ORIGINAL group) Transport PSMAQ Association, Inc. No change FX. AUV, etc No change 3 years 2009 (Bonifacio 09 FEBRUARY group) Transport P-MAQ Malinao, Pasig City FX only Association, Inc. 2 F. Manalo St. Brgy. 11 1 year 06 MARCH 2009 (Tanala Group) Transport

Term of Office Directors 1 year 3 years 1 year

29 GIS dated 05 December 2009, Annex"30." 36 While the case is captioned by the complainant-appellant as "PSMAQ Transport Association, Inc. vs Tanala, et al." the current name of the association as per its latest amendment is still P-MAQ

31. Repubfic Act No. 8799 (2000). 33 Based on the allegations by the parties and the documents submitted respective thereto. 32 Section 5.1(m). Transportation.

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Among others, the complainant-appellant alleges: "this Honorable

Commission imposed large fines upon the complainant-appellant due to the

fraudulent act of the respondents-appellees of filing several General Information

Sheets which stated some false information which are contrary to the Articies of

Incorporation and By-Laws which were not properly amended."4 These fines were

imposed by the CRMD for the following violations: change in the number of its Board

of Trustees, change in the principal office, change in its Annual Meeting which were

done without proper amendment of the Articles of Incorporation.35 Complainant-

Appellant also alleges that the respondents "stated a complete falsehood under oath

when they stated that P-MAQ Transport Association, Inc. 'is in the process of

registration with the Securities and Exchange Commission' when in truth and in fact

the Corporation had been registered as far back as February 2005 or four (4) years

after they executed the Joint-Affidavit of Undertaking to Change Name."36

Meanwhile, the respondents-appellees allege that complainant-appeilant and

four other incorporators "misrepresented themselves as incumbent officers of P-MAQ

before the SEc and they surreptitiously amended the Articles of Incorporation and

by-laws of P-MAQ Transport.. .

Notwithstanding the passage of the Securities and Regulation Code, relevant provisions of Presidentia! Decree No. 902-A38 remain in force including the power to 'suspend, revoke, after proper notice and hearing, the franchise or certificate of

registration of corporations, partnerships or associations, upon any of the grounds provided by law"39 that includes "fraud in procuring its certificate of 'registration."40

The serious allegations of fraud by the parties require a careful and exhaustive review of the factual circumstances surrounding the amendment of

Articles of Incorporation and By-Laws of PSMAQ that is well within the competence

of the CRMD, in the exercise of its powers lawfully delegated by the Commission,

over matters of registration. Thus, before the Commission can rule on the propriety

of revoking the Amended Articles of Incorporation and By-Laws of the PSMAQ, the

CRMD should determine whether or not these amendments were, indeed,

fraudulently procured and warrant the revocation of these amendments.

WHEREFORE, premises.considered, the instant case is hereby REMANDED to the Company Registration and Monitoring Department to determine the veracity of the allegations in the complaint dated 15 March 2009 filed by the Bonifacio group.

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

35 Ibid., Annex ":F." 37 Reply-Memorandum, par. 19. 38 Enacted on 11 March 1976. 36 Ibid,'par. 19, p. 12. 39 Section 5.. 40 Section 5(i). 34 Memorandum on Appeal, par. c.

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So ordered.

Mandaluyong City, 25 March 2011.

Pe B. Barin 24..

Chairperson

MA. JUANITA E. Commissioner Cuetc RAUL J. PALABRICA Commissioner

MAnuEl HUBE Commissioner ERTO B. GAITE ELADIC Cophmissioner JALA