SEC EB Case No. 04-14-326STRADCOM INTERNATIONAL HOLDINGS, INC., AppellantSEC EB Case No. 11-13-308STRADCOM CORPORATION

Securities and Exchange Commission COMMISSION EN BANC Republlc of the Phllippines Department of Finance

IN THE MATTEROF

STRADCOM INTERNATIONALSECEn Banc Case No.04-14-326

SEC Registration No.A200011088 HOLDINGSINC Promulgated: 06 October 2022

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SEC Registration No.A199724063 STRADCOM CORPORATION SECEn Banc Case No.11-13-308 Promulgated:06October 2022

DECISION

respectively. Memorandum on Appeal dated 4 April 2014 (SEC En Banc Case No.04- assailing the Orders dated 13 August 2013 and 3 March 2014 (the the sham General Information Sheets (GIS dated 1 December 2010 and Mr.Jer B.Samson (Mr.Samson),and Mr.Rodolfo Millare (Mr.Millare November 2013 SEC En Banc Case No. 11-13-308, and the 14-326 filed by Stradcom International Holdings,Inc.(Stradcom "Assailed Orders" issued by the Company Registration and Monitoring Department (CRMD) which denied the Appellant's request to expunge 1June 2011,executed and filed by Mr.Bonifacio Sumbilla(Mr.Sumbilla) Before this Commission are the Memorandum on Appeal dated 7

RELEVANT FACTS

particularly of the following: been consistently elected as members of, and composed the Board of Directors (the Board of the corporation. During the Annual Stockholders Meeting of Stradcom that was held on 7 May 2010,the 2010,Mr.Cezar Quiambao and his team (the Quiambao Group") had Quiambao Group were again elected as members of the Board,composed From the time of incorporation of Stradcom in 2001 up to year

In the Matter ofSTRADCOM International HodingsInc SEC En Banc Case No.11-13-308 SECEn Banc Case No.04.14.326 Stradcom Corporation Page 2 of 11 DECISION

7 2 6. 3 4 S. Cezar T.Quiambao Horacio M.Borromeo,Jr. Owen S.Carsi Cruz Anthony K.Quiambao; Demetrio G.Demetria;and Roberto F.De Ocampo Wilhardo H.Morales.

officers of Stradcom During the same meeting, the following were also elected as

A 1. 2 3. 5. Roberto F.De Ocampo Oscar A.Cabading Owen S.Carsi Cruz Eric Gene C.Pilapil Cezar T.Quiambao Assistant Corporate Secretary.3 President; Treasurer; Chairman of the Board Corporate Secretary;and

held.Thus,the Quiambao Group and the corporate officers continuously discharged their functions under a hold-over capacity. The corresponding GIS were filed with the Commission by Stradcom. From 2010 up to the filing of the Complaint,no annualmeeting was

and officers,particularly year 2010 the"November 2010 GIS"),allegedly without the knowledge 2010 where the Sumbilla Group were elected as members of the Board and authority of Stradcom. The November 2010 GIS disclosed that Stradcom conducted a special stockholders'meeting on 24 Novernber On 10 November 2010,Mr.Samson filed a GISS for Stradcom for the

6 8. 2 3 4 5 I 1 Rodolfo A.Millare Enrico M.Bilang Ronnie M.Bilang Jer B.Samson Dolney S.Sumbilla Egy G.Geronand Bonifacio Sumbilla Aderito Z.Yujuico Corporate Secretary -Chairman and CEO -Treasurer - Assistant Corporate Secretary

2 AnnexCof thc Appeal SEC En Banc Case No.04-14-326] Memorandurn of AppealSEC En Banc Case No.04-14-326.AnnexC IbidAnnex"D"ofthe Appeal

In the Matter of.STRADCOM International Holdings.Ine 5EC En Banc Case No.O4-14-326 SECEn Banc Case No.11-13-308 Stradcom Corporation Page 3 of 11 DECISION

2010 GIS" with the Commission, which declared that Stradcom conducted a special stockholders'meeting resulting in,among others,the election of the Sumbilla Group as members of the Board. On 1 December 2010,Mr.Samson filed another GIS(the"December

the Sumbilla Group,claiming to be the legitimate directors of Stradcom, attempted to forcibly takc ovcr the corporation's IT facility on 2 on-duty.The series of attempts to take-over the IT facility of Stradcom which the Sumbilla Group subsequently carried out, were likewise December 2010.The attempt,however was foiled by the security guards unsuccessful.7 On the basis of the November 2010 GIS and December 2010 GIS

public and prevent the use of such documents to commit illegal acts. be the legitimate directors and officers of Stradcom are not stockholders the November 2010 GIS and December 2010 GIS be expunged from the records of the Commission, as they are not official documents of the corporation. The request was made in an effort to protect the general of the corporation, the Quiambao Group,after filing criminal charges, filed on 8 December2010 before the Commission a Letter requesting that Considering that the members of the Sumbilla Group who claim to

matter,being an intra-corporate dispute,is outside the jurisdiction of the of the CRMD denied the Quiambao Group's request on the ground that the Commission. In its Letter dated 21 December 2010,1 Director Ferdinand B.Sales

which resulted in the re-election of the Quiambao Group as members of Commission on 31 March 2011. the Board and officers. The GIS reflecting the foregoing was filed with the On 29 March 2011,Stradcom held its Annual Stockholders'Meeting

disclosing that the Sumbilla Group was elected as members of the Board of Stradcom during the special stockholders meeting held on 3 May 2011 (the "May 2011 GIS").1 On 1June 2011,Mr.Samson filed with the Commission another GIS

Annexes[toJ-2af the Appeal SEC En Banc Case No.11-13-308 AnnexFofthe Appeal (SEC En Banc Case No.04-13-326 AnnexFof the AppealSEC En Banc Case No.0414-326 Pars 11 and 12 of the AppealSEC En Banc Case No.04-14-326 1bid.Annexp

In the Matter of:STRADCOM International HoldingsInc SEC En Banc Case No.11-13-308 SEC En BancCase No.04-14-326 Stradcom Corporatian Page 4 of 11 DECISION

2010 GIS(collectivelytheSumbilla Group GIS) the Commission to expunge from the records the May 2011 GIS, and reiterated its request to expunge the November 2010 GIS,and December In its letter dated 11 October 2011,the Quiambao Group requested

On 18 August 2011,the Regional Trial Court of Urdaneta City

in any proceeding. Resolution). finding that Mr. Samson and Mr. Millare were not stockholders of Stradcom,and unauthorized to represent the corporation issued a Resolution relative to SEC Case No. U-14212 the RTC

The Sumbilla Group elevated the RTC Resolution to the Court of

Decision",sustaining the finding of the RTC and dismissing their Petition for violating the rule against splitting a cause of action. Appeals, which issued a Decision dated 10 August 2010 (the "CA

executory on 13 March 2013,and was entered into the Book of Entries of Judgment.is 5 August 2013(theSC Resolution"].The SC Resolution became final and The Supreme Court upheld the CA Decision in its Resolution dated

corporation,has no authority to represent and file any document for and on behalf of the corporation. informed the CRMD of the SC Resolution,and reiterated its requcst for the expunction of the Sumbilla Group GIS on the ground that the Sumbilla Group, having been conclusively found not to be stockholders of the In a Letter dated 17 February 201414 the Quiambao Group

investing public. Commission. Director Sales, however, decided to annotate the status Assailed Orders which denied the requests of the Quiambao Group. Director Sales maintained the position that the matter is an intra- corporate corporate dispute which is outside the jurisdiction of the DISPUTED"in the subject GISs filed with the Commission to alert the Notwithstanding the manifestations, Director Sales issued the

Stradcom International Holdings,Incas represented hy Rodolfo Millare vs Stradcom Corporation et al.[AnnexKof the Appeal] AnnexPof the AppealSEC En BancCase No.04-14-326

In the Matter ofSTRADCOM International HoldingsInc SEC En Banc Case No.04-14-326 SEC En BancCase No.11-13-308 Stradcom Corooration Page 5 of 11 DECISION

ISSUE

reversible error when he denied the request of the Quiambao Group to Company Registration and Monitoring Department, committed expunge from the records the GIS filed by the Sumbilla Group. Whether Director Sales, in his capacity as the director of the

RULING

The Appeal is impressed with merit.

request for expunction of the Sumbilla Group GIS was premised on the abovementioned annotation. directing such action. Hence, the CRMD merely caused the on the finding that the matter partakes of an intra-corporate dispute that is outside the jurisdiction of the Commission.Moreover,the denial of the absence of a final and executory order from the appropriate court In the Assailed Order,the CRMD justified the dismissal of the case

affirmed by no less than the Supreme Court that the Sumbilla Group are not stockholders of Stradcom, does not authorize the Commission to a direct order from the court. expunge a questionable document,filed by an outsider in the absence of The CRMD was therefore of the position that a conclusive finding

This Commission does not agree

The matter subject of the instant dispute. case is not an intra-corporate

of the Securities Regulation Code (SRC) expressly conferred jurisdiction acting as commercial courts.Thus,when the nature of the controversy is intra-corporate,the RTC has the exclusive jurisdiction to take cognizance over intra-corporate controversies upon the Regional Trial Courts (RTC). of, and pass upon the same Jurisdiction over the subject matter is conferred by law.Section 5.2

corporate relations,or between or among stockholders, or between any An intra-corporate dispute is understood as suit arising from intra-

In the Matter ofSTRADCOM International Hoidings,Inc SEC En Banc Case No.04-14-326 SEC En Banc Case No.11-13-308 Stradcom Corporation Page 6 of 11 DECISION

or all of them and the corporation.is To determine if a suit partakes of a nature of an intra-corporate dispute,the Supreme Court has consistently applied the relationship test and the nature of the controversy test,thus:

the relationship test and the nature of the controversy test. "In corporate controversy.theCourtuses twotests. determining whethera dispute constitutes namely. an intra-

following relationships:1) between the corporationpartnership or association and the public(2)between the corporation,partnership or association and the State insofar as its franchise, permit or license to operate is concerned;3 between the corporationpartnership or association and its stockholders,partners,members or officers;and (4 among the stockholders, partners or associates themselves. Thus under the relationship test, the existence of any of the above intra- corporate relations makes the case intra-corporate. An intra-corporate controversy is one which pertains to any of the

Under the nature of the controversy test, the controversy must not of the parties as well as the nature of the question involved.is only be rooted in the existence of an intra-corporate relationship,but must as well pertain to the enforcerment of the parties'correlative rights and obligations under the Corporation Code and the internal and intra- jurisdiction should be determined by considering both the relationship corporate regulatory rules of the corporation. In other words

tier test is designed to ensure that corporate disputes which are intra corporate in nature are handled exclusively by the RTc,thus Supreme Court emphasized that the mandatory application of the two In Metropolitan Bank & Trust Co.v.Salazar Realty Corp 17 the

stockholder suits, whether individual, class, or derivative. The two therelationship of the parties of the case to one another and the second test assesses nature of the controversy among the parties: resorted to Section 5 thercof to allocate jurisdiction between the SEC and the regular courts.The application of Section 5 was eventually standardized into a two-tier test which has been applied to all kinds of "With the advent of the SEC Reorganization Decree,jurisprudence has "tiers" are actually two separate tests: the first test assesses

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No.187872.November 17,2010 Strategic Alliance Development Corporation vs Star Infrastructure Development Corporation (G.R Medical Plaza Makati Condominium Corp.v.CullenG.R.No.181416.[November 11,2013].720 PHL 732-749]

In the Matter ofSTRADCOM International HoldingsInc SEC En BancCase No.04-14-3Z6 SEC En Banc Case No.11-13-308 Stradcom Corporaticn Page 7 of 11 DECISION

do not involve actual intra-cornorote disputes are filtered out The two-tier test ensures that cases involving corporations but

[1n the 1984 case of DMRC Enterprises V.Este del Sol

jurisdiction for the sole reason that the dispute involves a corporation,its directors,officers,or stockholders.We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute. the controversy test. We declared in this case that it is not the mcre existence of an intra-corporate relationship that Mountain Reserve,Inc,the Court introduced the nature of gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their

internaland intra-corporate regulatoryrulesofthe incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra corporate controversy exists.Emphasis supplied that relationship must also be considered for the purpose of corporate. The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as corporation.If the relationship and its incidents are merely Under the nature of the controversy test,the incidents of ascertainingwhether the controversy itselfis intra- well pertain to the enforcement of the parties' correlative rights and obligations under the Corporation Code and the

the matter subject of the instant case is not intra-corporate in nature. Applying the two-tier test,the Commission finds and so holds that

members of the Sumbilla Group are not stockholders of Stradcom. In the involve a corporation and its stockholders. Neither does the dispute same manner,the nature of the controversy test is not satisfied because the Sumbilla Group,not being stockhoiders of Stradcom,cannot claim to exercise the rights provided by law and its constitutional documents. involve the stockholders themselves. This is supported by the SC Resolution which affirmed the finding of the RTC and CA that the The relationship test is not satisfied because the dispute does not

of jurisdiction has no basis in law and jurisprudence,and must therefore be reversed. On account thereof,the dismissal of the case on the ground of lack

In the Matter ofSTRADCOM International HoldingsInc SECEn Banc Case No.11-13-308 SECEn Banc Case No.04-14-326 Stradcom Corporauon Page 8of 11 DECISION

The Commission has the power and

records a false,fraudulent or bogus authority to expunge from its GS.

judicially determined to have been filed by one who is not a stockholder the Commission on the ground that"the Commission has not received a final and executory order from of the appropriate court, specifically directing the same to expunge the assailed report from its records."Stated differently,the CRMD was saying that the Commission has no power to remove from its records a report for a particular corporation that was Quiambao Group to expunge the Sumbilla Group GIS from the records of or member thereof,absent a clear order from the court to that effect In the Assailed Orders, the CRMD denied the request of the

We do not agree.

incidental to carry out its express powers, thus: a wide range of power and authority intended to ensure that the hard- earned money/property of investors which are paid as equity in a corporate vehicle is managed and used in accordance with minimum accepted standards and best practices.This is consistent with the catch all provision contained in Section 5.1n) of the SRC which grants the Commission such powers that are implicd from, or arc necessary,or The mandate of the Commission to protect investors encompasses

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

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to the carrying out of, the express powers granted the Commission to those which may be implied from,or which are necessary or incidental achieve the objectives and purposes of these laws. n) Exercise such other powers as may be provided by law as well as

from its records any filing that has been finally determined to be false or fraudulent.In the same manner,the Commission is duty bound to remove filings,we hold that the same necessarily includes the power to rermove In relation to the duty of the Commission to accept corporate

In the Matter ofSTRADCOM International Holdings, Ine SECEn Banc Case No.04-14-326 SEC En Banc Case No.11-13-308 Stradcom Corporation Page 9 of 11 DECISION

fraudulent act, that might, in all probability,result in the erosion of the confidence by the public in the corporate system. This,we hold,is not the have been filed by a person who is not a stockholder or member of such corporation. A contrary position will promote a situation where report filed by a non-stockholder/member to remain as part of the records of a corporation will sanction the practice of giving premium to a intent of the law. a report from the records of a particular corporation if such is proven to government processes and facilities are allowed to be utilized to perpetrate fraud and/or cause confusion to the public.Worse,to allow a

intents and purposes, not part of the corporate documents of the judicial notice of, and considered as substantial evidence, that such for and on behalf of the corporation. Hence, any action done by the Sumbilla Group for and on behalf Stradcom is not an action of the corporation and does not bind the latter,in the same way that reports purporting to be that of Stradcom which are filed by persons who are not stockholders or authorized representatives thereof are, for all legal corporation. persons have no personality to act,represent,and/or file any document of the Sumbilla Group are not stockholders of Stradcom,should be taken In the instant case,the SC Resolution which ruled that the members

the avoidance of fraud and confusion on the part of the public is secured. request of Stradcom to have these documents removed from its the valid corporate actions of Stradcom. More importantly,by doing so instant case, the quantum of proof necessary to justify a decision is filed by the Sumbilla Group is not a report of the Stradcom,and should thus be removed from its records which are on file with the Commission. In this context, it behooves the Commission to act affirmatively on the corporate filings,if only to ensure that what is on its records fully reflect merely substantial evidence or "such relevant evidence as a reasonable equally reasonable might conceivably opine otherwise"1 The Sc Resolution which was submitted in evidence, showed that the reports mind might accept as adequate to support a conclusion,even if other minds It should be emphasized that in administrativc actions,such as the

and attempted to carry out a fraudulent take-over of its IT facilitythe Sumbilla Group actually utilized its GIS filings to mislead and deceive the public into the belief that they are the legitimate directors of Stradcom, Finally, in the context of the establishcd by evidence that the

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to be used to perpetrate fraud,and affected corporations are left at the mercy of fraudsters. instant case.A different construction will not only negate the objective of the Policy,but also result in an absurd situation where a rule is allowed already evidence showing that a party which filed a GIS for a particular corporation is not a stockholder thereof,and is therefore bereft of any intra-corporate dispute as"DISPUTED,"it should be emphasized that this policy finds application only in instances where there is a real intra- filed with the Commission.SEC Office Order No.242 was implemented in recognition of the fact that it is the proper RTC which has exclusive jurisdiction to take cognizance of,and pass upon cases involving an intra- corporate dispute. In other words,this policy does not apply if there is authority to represent or bind such corporation,as what happened in the corporate dispute as shown prima facie in the documents presented or removal of the Sumbilla Group GIS even more becomes imperative.While this Commission takes cognizance of SEC Office Order No.242,Series of 2013,directing the CRMD to, among others,ensure that there is no double filing of GIS,and to mark the multiple GIS filed by corporation with

intent and spirit of the policy of the Commission. not only completely disregard the finding of the Supreme Court, as latter. This action should be reversed as this is not in keeping with the annotate the word"DISPUTED"on the Sumbilla Group GIS,as well as on all the relevant GIS filed by the Quiambao Group pursuant to the Rule did embodied in the SC Resolutionit also in cffect rccognized the acts of persons who are not stockholders of Stradcom,to the detriment of the In the instant case, we hold that the decision of the CRMD to

of shares by the parties therein. other documents of a corporation arising from the fraudulent acquisition Commission will be exercising its power to expunge from its records corporate papers and documents.In the case of Carmen S.Pascual, et al. vs Gabriel R.Pascual et al.(SEC-SICD Case No.3085,the Commission sustained the expunction from its records all the corporate papers and It should be emphasized that this is not the first time that the

13 August 2013 and 3 March 2014 are hereby REVERSED and SET ASIDE.The CRMD is hereby DIRECTED to expunge from the records of the Commission all the General Information Sheets executed and filed by Mr. Jer B. Samson and Mr. Rodolfo Millare. WHEREFORE,premises considered,the Orders of the CRMD dated

In the Matrer ofSTRADCOM International Holdings,Inc SEC En Banc Case No.11-13-308 SEC En Banc Case No.04-14-326 Stradcom Corporation Page11of11 DECISION

SOORDERED.

Makati City, Philippines.

EMILIO B.AQUINO Chairperson

JAVEPAULD.FRANCISCO Commissioner KELVINLESTER K.LEE Commissioner

KARLOS.BELLO Commissioner MCJILL BRYANT T.FERNANDEZ Commissioner