SEC Adm. Case No. 10-09-180 Salvacion Acopio et. al. vs. J.R. Estrada & Sons, Inc.

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

VASQUEZ, ACOPIO, SEVERINO BAROZA, JR., ArteMiO CaPalaran, And nina In THE MAtTER oF SALVACIon Petitioners-Appellees, SEC En Banc Case No. 10-09-180

-versus-

J.R. ESTRADA & SONS, INC. Respondent-Appellant.

DECISION

21 October 2009 filed by J.R. Estrada & Sons, Inc. ("J.R. Estrada") assailing the Order of Revocation dated 06 October 2009 issued by the Director of the Company Registration and Monitoring Department ("CRMD"). For consideration is the Notice of Appeal with Memorandum on Appeal dated

FACTS OF THE CASE

June 1964, with business and principal office address at Rm. 204 Medical Arts Building, T.M. Kalaw Avenue, Ermita, Manila.? J.R. Estrada is a stock corporation registered1 with the Commission on 26

since 1996 and for not having a principal office or place of business. Complaint" addressed to CRMD, requesting the revocation of J.R. Estrada's Certificate of Registration due to non-filing of its General Information Sheet (GIS) On 08 July 2008, a certain Salvacion Acopio filed a "Formal Letter of

Estrada, directing it to appear for a conference scheduled on 26 August 20o8 and to On 05 August 2008, CRMD issued a Notice of Conference addressed to J.R

representative of J.R. Estrada appeared during the conference. 2007 and its Financial Statements for 1996 and 1999. However, no officer or show cause why it should not be penalized for the non-filing of its GIS from 1996 to

2 Based on thie 200% General Information Sheet of J.R. Estrada & Sons, Inc. 1 SEC Registration No. 25379

Salvacion Acopio, et al. v. J.R. Estrada & Sons, Inc. SEC EB Case No. 10-09-180 Page 2 of 6

addressed to J.R. Estrada, informing it again of its violations and directing it to submit several required documents and to pay the fines that will be assessed upon submission of the said documents. On 14 October 2008,"CRMD issued a Finai Notice of Conference, likewise

in the total amount of Php 118,500.00 to be paid not later than 30 November 2008. J.R. Estrada. Thus, he was informed that J.R. Estrada was being assessed with fines This time, a certain Artemio E. Salingay appeared before CRMD in behalf of

ietter dated 07 January 20093, J.R. Estrada, through its president, Remedios E. Alcabao, requested the deferment of payment of the said fines due to unavailability of funds. Nonetheless, J.R. Estrada failed to pay the said fines on the due date. In a

herein filed a Petition for Revocation of J.R. Estrada's Certificate of Registration, thereby supplementing the "Formai Letter of Complaint" earlier filed. On 13 January 20094, Salvacion Acopio and the three (3) other Appellees

Estrada to submit its answer to the said Petition as well as the supporting indicated in its 2008 Generai Information Sheet. However, after several attempts to serve the same, it was returned to the Commission stamped with "Return to Sender documents and affidavits. The same was sent to J.R. Estrada in the addressi Unclaimed". On 27 January 2009, CRMD issued a "Summons/Subpoena" requiring J.R

Estrada's Certificate of Incorporation for violation of the Corporation Code and the SEC Rules on reportorial requirements. Thus, on 06 October 2009, CRMD issued the assailed order revoking J.R.

To wit, the order of the CRMD reads:

"Clearly, Respondent's failure to fie its GIS from 1996-2007, the late filing of its 2008 GIS, the fate registration of its Stock and Transfer Book and the non-settlement of the assessed fines to date, aggravated by the change of principai office without proper amendment of its AI. faise office address and disregard of a show cause order, are sufficient grounds to revoke its Certificate of Incorporation."

Hence, the instant appeal.

3 Filed with the Commission on 21 January 2008. date of the Petition appearing in CRMD's Order dated 06 October 2009 is merely a typographical 4 Records of the case show that the Petition was filed on this date. The date "29 April 2009" as the

5 Rm. 204 2/F Medical Arts Bidg., T.M. Kalaw, Ermita, Manila. rror

SEC EB Case No. 10-09-180 Salvacion Acopio, et al. v. J.R. Estrada & Sons, Inc. Page 3 of 6

ISSUE

Certificate of Incorporation was proper. The issue to be resoived is whether or not the order revoking J.R. Estrada's

RULING

We rule in the negative

and rules on reportorial requirements. J.R. Estrada is alleged to have violated the provisions of the Corporation Code

and the Commission's reportorial rules and regulations. Under the basic legai presumed to know the law, and one's ignorance thereof is not an excuse. Moreover. principle imbued in the Latin maxim "ignorantia legis non excusat" everyone is the corporation was given notice and adequate opportunity to be heard. The CRMD J.R. Estrada tries to justify its lapses by claiming lack of awareness of the law

indicated in its 2008 GIS. However, J.R. Estrada, through its representative, Artemio E. Salingay, appeared only on 11 November 2008. sent no less than two (2) notices to J.R. Estrada at its principal office address as

herein, a "Summons/Subpoena" was issued by the CRMD7 but was returned subpoenaed by CRMD regarding the Petition for Revocation filed by the Appeilees Furthermore, contrary to J.R. Estrada's claim that it was never summoned/

unciaimed. Upon perusal, there is a discrepancy in the principal office address indicated in its 2008 GIS and the address stated8 in its Articles of Incorporation, and without proper amendment of the said Articles, giving rise to a violation of Section 169 of the Corporation Code.

6 The CRMD issued a Notice of Conference dated 05 August 2008 directing it to appear for a conference on 26 August 2008 and the second was the Final Notice of Conference dated 14

7 Summons/Subpoena dated 27 Jan::ary 2009. 8 Pasay City. Sec. 16. Amendment of Articles of Incorporation. - Unless otherwise prescribed by this Code or by special law, and for ilegitimate purposes, any provision or matter stated in the articles of incorporation October 2008.

may be amended by a majority vote of the board of directors or trustees and the vote or written assent of the stockhoiders representing at least two-thirds (2/3) of the outstanding capitat stock, without prejudice to the appraisal right of dissenting stockholders in accordance with the provisions of this Code xx.

The original and amended articles together shall contain all provisions required by law to be set out in the articies of incorporation. Such articles, as amended shall be indicated by underscoring the change or changes made, and a copy thereof duiy certified under oath by the corporate secretary and a majority of the directors or trustees stating the fact that said amendment or amendments have been duly approved by the required vote of the stockhoiders or members, shall be submitted to the Securities and Exchange Commission.

Salvacion Acopio, et al. v. J.R. Estrada & Sons, Inc. SEC EB Case No. 10-09-180 Page 4 of 6

Section 144 of the Corporation Code provides that:

provisions of this Code or its amendments not otherwise specifically notice and hearing, be dissolved in appropriate proceedings before the construed to repeal the other causes for dissolution of a corporation penalized therein shall be punished by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand but not more than five (5) years, or both, in the discretion of the court. If the violation is committed by a corporation, the same may, after Securities and Exchange Commission: Provided, That such dissolution shall not preclude the institution of appropriate action against the director, trustee or officer of the corporation responsible for said violation: Provided, further That nothing in this section shall be provided in this Code." "Sec. 144. Violations of the. Code. - Violations of any of the (P10,000.00) pesos or by imprisonment for not less than thirty (30) days

for violations of the Corporation Code and Commission rules and regulations. Among the powers of the Commission is to impose the appropriate sanctions

not be decreed unless no other adequate remedy is available.to' corporation the harsh penalty of revocation. Forfeiture of a corporation's charter will However, all available remedies should be exhausted before visiting upon the

trade reiations and which fosters friendly commercial intercourse among countries. not an 'unduly harsh, interpretaticn which does not hamper the development of Moreover, in the exercise of supervisory and regulatory functions over corporations tiberal construction which: will best execute its purpose, even though such registered with the SEC, the Corporation Code should be given a reasonable or The Corporation Law (now Corporation Code) must be given a reasonable,

construction is not within its strict literal interpretation. A strict construction should not be permitted to defeat the policy ctct pose of the Code12, that is, "to

established for private gain establish a new concept of busin FT C so that they are not merely entities the National Government in spreading the benefits of capitalism for the social and economic development of the nation. H13

The amendments shall take effect upon their approval by the Securities and Exchange Commission or from the-date of filing with the said Commission if not acted upon within six (6) months from the date of filing for a cause not attributable to the corporation.

12 SEC Opinion No. 04-35, addressed to SGV & Co.,"15 June 2004. 1 Fletcher Cyclopedia Corporations, Permanent Edition, Volume 16-A, p. 145. 11 Home Insurance Company vs. Eastern Shipping Lines, G.R. No. 34382, Juty 20, 1983. 13 Explanatory Note to Cabinet Bill No. 3, which became the basis for the Corporation Code enacted by the then Interim Batasang Pari bansa.

Page 5 of 6 Salvacion Acopio, et al. v. J.R. Estrada & Sons, Inc. SEC EB Case No. 10-09-180

Presidential Decree No: 902-A, as amended, read as follows: Section 5.1(f) of the Securities Regulation Code14 and Section 6(i) of

Commission shali act with transparency and shall have the powers the Corporation Code, the Investment Houses Law, the Financing Commission shall have, among others, trie following powers and and functions provided by this Code, Presidential Decree No. 902-A. Company Act and other existing laws. Pursuant thereto the functios "Sec. 5. Powers and Functions of the Commission, -- 5.1. The

XXX XXX XX (i) Impose sanctions for the violation of laws and the rules, regulations and orders issued pursuant thereto:

XXX XXX XXX

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

XXX XXX XXX

rules and regulations, its orders, decisions and/or rulings; (i) To impose fines and/or penalties for violation of this Decree or any other laws being implemented by the Commission, the pertinent

XXX XXX XXX

revocation may be too harsh a penalty when there are available sanctions that may be imposed upon J.R. Estrada that do not diminish nor render trivial the gravity of the offenses it committed for its non-compliance with the Corporation Code and the rules and regulations of the Commission. and comply fully with the requirements under the law and regulations. Thus, In the present case, J.R. Estrada showed its willingness to rectify its lapses

the Certificate of Incorporation of J.R. Estrada & Sons, Inc., is hereby SET ASIDE. PARTIALLY GRANTED. The Order of Revocation dated 06 October 2009, revoking WHEREFORE, premises considered, the instant appeal is hereby

For vioiations of reportorial requirements and Article 16 of the Corporation

to be computed by the Company Registration and Monitoring Department, for immediate compliance within ten (10) days from the date of receipt of this decision. Code, J.R. Estrada & Sons, Inc. is hereby ordered to pay a FINE, the final amount

J.R. Estrada & Sons, Inc. is hereby DIRECTED to submit proof of compliance with this decision.

14 Republic Act No. 8799 (2000)

Salvacion Acopio,.et al. v. J.R. Estrada &: Sons, Inc. SEC EB Case No. 10-09--180 Page 6 of 6

SO ORDERED.

Mandaluyong City, 1 July 2010

: B. BARIN Chairperson

MA. JUANItA e. CUeTO Commissioner RAUL J. PALABRICA Commissioner

AN

MANuEL HuBertO B. GAItE* Commissioner ELADIO Commissioner JALA

*on leave of absence