SEC EB Case No. 07-12-263SAN MIGUEL BREWERY, INC., Appellant, v. JUSTINA F. CALLANGAN, Appellee.

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance

SAN MIGUEL BREWERY, INC.,

Appellant,

-versus- SEC En Banc Case No. 07-12-263 Promulgated on: 29 September 2022

and Exchange Commission, her capacity as the Director of the Corporation Finance Department of the Securities JUSTINA F. CALLANGAN, in X Appellee.

DECISION

Thirty-Eight Billion Eight Hundred Million Pesos (P38,800,000,000.00) portion of which reads: 2012 (the "Appeal"), which was filed on even date by San Miguel Brewery, Inc. (San Miguel), assailing the Letter-Order dated 5 June 2012 of the Miguel to file an amended Registration Statement (RS) in relation to the Fixed Rate Bonds (Bonds) it issued on 3 April 2009, the dispositive Corporation Finance Department2 (the "Assailed Order") directing San Before this Commission is the Memorandum on Appeal dated 6 July

amended registration statement within fifteen (15) days from receipt of this letter. "In view of the foregoing, you are hereby directed to file an

THE PARTIES

under the laws of the Philippines, having been issued a Certificate of Registration with SEC Registration No.CS200711828.Its principal office San Miguel is a domestic corporation duly organized and existing

2 Now, the Corporate Governance and Finance Department 1 AnnexAof the Appeal.

San Miguel Brewery inc. vs Justina Callangar SEC En Banc Cas Se No. 07-12-263 Page 2 o{6 DECISION

is at San Miguel Corporation Head Office, #40 San Miguel Avenue, Mandaluyong City, Metro Manila.

impleaded in this case in her capacity as Director of CFD. Corporation Finance Department (the "CFD"), one of the operating compliance with applicable laws, rules, and regulations by public companies, mutual fund companies, exchange traded funds, financing companies, lending companies, issuers of members certificates/shares timeshares/commercial papers and foundations. Dir. Callangan was departments of the Securities and Exchange Commission (the "Commission"), charged with the duty of monitoring and ensuring Dir. Justina Callangan (Dir. Callangan) is the Director of the

THE RELEVANT FACTS

2009. San Miguel forthwith issued the registered Bonds on 3 April 2009. the Registration Order and Permit to Sell Securities for the P38.8 Billion RS provides that the 0ffer Period is from 18 March 2009 to 27 March Bonds, which rendered effective the RS dated 16 March 2009. The said On 17 March 2009, the Commission issued in favor of San Miguel

between San Miguel and Bank of the Philippine Islands, which embodied 3.5:1 for as long as the Bonds, or any portion thereof, remain outstanding. the terms and conditions of the Bonds, San Miguel agreed to maintain a Minimum Current Ratio3 of 1:1 and a Maximum Debt-to-Equity Ratio4 of In the Trust Agreement dated 16 March 2009 (the "Agreement")

replacement of its minimum current ratio covenant with a minimum bondholders, in compliance with the Agreement; (b) it will execute a supplemental agreement covering the amendnent after securing the consent of the majority bondholders; and (c) file a report on SEC Form 17-C with the Commission, disclosing the terms of the supplemental agreement. Relative thereto, San Miguel sought the confirmation of the CFD that its proposed procedure is sufficient to render the proposed that it will follow, i.e., that (a) it will send a written notice of the proposed amendment to all bondholders and secure the consent of the majority CFD of its intention to change its covenant in the Agreement to maintain a minimum current ratio of 1:1, with a covenant to maintain a minimum interest coverage ratio of 4:75:1, the same being the more relevant ratio. To implement this proposai, San Miguel informed the CFD of the process In its letter dated 16 December 2011,5 San Miguel informed the

3 Current ratio refers to SMBI's current assets divided by its current liabilities. 4 Debt-to-Equity Ratio refers to SMBI's indebtedness for borrowed money divided by its total 5 Annex "B" of the Appeal. stockholders' equity.

San Miguel Brewe SEC En Bant Case No. 07-12-263 ncvststnaiaika Page 3 of6 DECISION

interest coverage ratio covenant, and that it does not need to file an amended RS for the Bonds.

that it has referred the latter's 16 December 2011 letter to "the Office of the General Counsel (OGC) as a request for opinion. Commission En Banc, and the same was subsequently referred to the In a letter dated 3 February 2012,% the CFD informed San Miguel

in the Agreement is required if, and as long as, the Bonds are still being the OGC Opinion was adopted by the Commission En Banc.7 OGC Opinion issued on 4 April 2012 (the "OGC Opinion") which provided that the filing of an Amended RS, covering changes in financial covenants traded in the secondary market. The CFD also informed San Miguel that On 5 June 2012, the CFD issued a letter informing San Miguel of the

2012, directing San Miguel to file an Amended RS. On the basis thereof, the CFD issued the Assailed Order on 12 April

Assailed Order, arguing that there was no more need to file an Amended Miguel's motion for reconsideration was denied by the CGFD which resulted in the filing of the instant Appeal. RS since the change in financial covenants ratio under the Bonds have already been completed and disclosed to the investing public. San On 4 July 2012, San Miguel sought the reconsideration of the

the dismissal of the Appeal for lack of merit, citing the OGC Opinion in support of its position. Further, the CFD raised also maintained that the Appeal should be dismissed for being a prohibited pleading, arguing that since the Assailed Order was issued based on the Resolution of the En Banc, the proper remedy was to have filed the same with the Court of Appeals. On 30 July 2012, the CFD filed its Reply Memorandum praying for

necessary since the offering of the Bonds were already completed. September 2012 ("Rejoinder") where it maintained that the Appeal filed with the Commission was proper because it sought the reversal of the Assailed Order issued by the Director of the CFD. San Miguel also reiterated its position that the amendment of the Rs is no longer On 19 September 2012, San Miguel filed its Rejoinder dated 13

(Series Bonds) and 3 April 2019 (Series C Bonds), the Bonds matured. On separate dates, i.e., 3 April 2012 (Series A Bonds), 4 April 2014

6 Annex "A" of the Reply. Id.., Annex "C"

Subsequently, their respective face values were paid.s The dates of dated 3 October 2011, were disclosed by San Miguel to the Commission. maturity of the Bonds, which are also contained in the Philratings Report San Miguel Brewery, (nc. vs Justina Callanga SECEn BanC Ca56 No.07-12.26 Page 4 of't DECISION

the Commission, through the OGC, issued an Order directing the MSRD and San Miguel to file a manifestation and inform the Commission of any supervening event that will facilitate the prompt disposition of the case. Regulation and Securities Department (MSRD). Thus, on 25 August 2021 registration of bonds and its issuers were transferred to the Markets During the pendency of the appeal, the jurisdiction over the

and imposing the appropriate penalties if it finds that San Miguel has the dismissal of the Appeal for lack of merit. The MSRD argued that the maturity and payment of the Bonds did not moot the Appeal, because the violated applicable laws, rules, and regulations. Commission is not precluded from ruling on the issue presented therein. On 3 September 2021, the MSRD filed its Manifestation praying for

deemed submitted for decision. To date, SMB has not filed any manifestation.10 Hence, the case is

ISSUE

should file an Amended RS with respect to the Bonds. The sole issue presented to this Commission is whether San Migue!

RULING We dismiss the instant case for being moot and academic.

the Supreme Court reiterated its consistent position on when a case can be considered moot and academic, thus: In Express Telecommunications, Inc. vs Az Communications, Inc.,r

anything it says on the matter will have no practical use or value.' issue between the parties, such that this Court is left with nothing to resolve. It can no longer grant any relief or enforce any right, and "A case is moot when a supervening event has terminated the legal

the case of Republic v. Moldex,12 the rule established in jurisprudence, that Relative thereto, the Supreme Court also reiterated and applied ir

5 See Order dated 17 March 2009 " Paragraph 4, MSRD Manifestation 16 Order was served on the counsel of record on 26 August 2021. 11 G.R. No. 196902, July 13 2020 12 G.R. No. 171041,10 February 2016

Sar Miguel Bre SEC En Banc Case No.712263 nas7C DECISION Page 5 of6

have no practical purpose, thus: administrative agencies exercising quasi-judicial powers) are precluded moot and academic cases should be dismissed, and that courts (as well as from rendering advisory opinions intended to resolve issues that will

opinions and resolve issues that would provide no practical use or or dismiss it on ground of mootness." (Emphasis Supplied) resolved by the court. This court refuses to render advisory value. Thus, courts generally "decline jurisdiction over such case "A case becomes moot and academic when, by virtue of supervening exist. There is no longer any justiciable controversy that may be events, the conflicting issue that may be resolved by the court ceases to

held by them, a ruling on whether San Miguel needs to amend its RS will not serve any practical purpose because given the foregoing Agreement, relating to the Bonds have already been complied with and extinguished. The maturity of the bonds and the full payment of their face value are supervening events that have effectively rendered the instant case moot and academic. the bondholders have been paid the face value of the Bonds respectively circumstances, the terms, conditions, as well as the obligations in the In the instant case, considering that the Bonds have matured, and

ceased to exist with its maturity, and the extinguishment of all the bondholders and prospective investors to speak of who are the intended Bonds. Any order directing the amendment of the RS will thus be an obligations attendant thereto. with the maturity and full payment of the Bonds, there are no more recipients of the information relating to the terms and conditions of the exercise in futility because the Bonds which are subject thereof have The amendment of the RS will then have no practical value because

of the RS. Specifically, the relevant AFS confirmed that San Miguel complied with its obligation to maintain a Minimum Current Ratio of 1:1 Bonds. conduct by the Commission of an independent examination of the Audited Financial Statements (AFS) submitted by San Miguel covering the years 2011 until 2019 shows that the latter complied with the terms and a Maximum Debt-to-Equity Ratio of 3.5:1 during the effectivity of the The foregoing notwithstanding, it is worth pointing out that the

become moot and academic should be dismissed. depart from the rule established in jurisprudence that a case that has Given the foregoing, this Commission finds no cogent reason to

San Miguel Brewery, Inc. vs Justina Callangan SEC En Banc Case No.07-12-263 Page 6 of 6 DECISION

academic. WHEREFORE, this case is DISMISSED for being moot and

SO ORDERED.

Makati City, Philippines.

MM EMILIO B. AQUINO Chairperson

JAVEY PAUL D.FRANCISCO Commissioner KELMINLESTER K?LEE Commissioner

KARLO S.BELLO Commissioner VUS MCJJLL BRYANT T.FERNANDEZ Commissioner