SEC Adm. Case No. 10-08-99 First Equis Inc.

SEC Bidg. EDSA, Greenhills, Mandaluyong City SECURITIES AND EXCHANGE COMMISSION Repub!ic of the Philippines

IN THE MATTER OF-

FIRST EQUIS INC. COMPLIANCE AND ENFORCEMENT DEPARTMENT, Petitioner. For: Revocation of Corporate SEC Admin Case No. 10-08-99 (CED Case No. 08-2875) Registration

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DECISION

filed by the Compliance and Enforcement Department1 ('cED" for brevity) on the ground of using fictitious and/or non-existent addresses of the corporation and its incorporators for purposes of registration, in vioiation of Section 6(i)(1) of Presidentiai Decree No. 902-A, as amended. Corporate Registration of First Equis Inc. ("FEI" for brevity) dated 20 October 2008 For consideration of the Commission En Banc is the Petition for Revocation of

FACTS OF THE CASE

Commission. revocation of certificates of registration for violation of the Securities Regulation Code2 (`SRC'), the .Corporation Code3, P.D. 902-A, as amended, including their Implementing Rules and Regulationa, and such other relevant laws enforced by the Petitioner CED is the cepartment of the SEC mandated to file petitions for

under SEC Registration No. CS200609642 with principal place of business at Lower Ground, Alfaro's Place, L.P. Leviste Street, Salcedo Village, Makati City. FEI is a corporation duiy registered with the Commission on 20 June 2006

Government of Japan ('FSA", for brevity) dated 30 November 2007 addressed to the CED informing the Commission of a suspected boiler room named First Equis Ltd. C`FEL", which claims to be located in Tokyo. Upon FSA's investigation, it appears The petition was prompted by a letter5 from the Financial Services Agency,

that FEL has a representative in' the Philippines by the name of Louis Morgante

1 Now the Enforcement and Prosecution Department. 2 R.A. 8799 (2000). 3 Batas Pambansa BIg. 68 (1980). 4 FEI's Certificate of Incorporation, attached as Annex "A" of the Petition. 5 Annex "C" of the Petition.

Compliance and Enforcement Department, Petitioner SEC Admin. Case No. 10-08-99 Page 2 of 5 (CED Case No. 08-2875) In the Matter of First Equis Inc.

whose address is indicated to be at Island Plaza Salcedo, 105 L.P. Leviste Street. business activities of FEL.I Suite 457 Salcedo Village, Makati City. The FSA requested information regarding the

the Commission. However, FEI is the one duly registered with the Commission. Upon indicated address of Louis Morgante turned out to be a rented mailbox. surveillance of the CED investigators, it was discovered that FEI never held office at its given address, as verified by the building administrator of Alfaro's Piace. Also, the Upon verification by the CED, it was found out that FEL is not registered with

addresses used by the incorporators in FEI's Articles of Incorporation were either fictitious or fabricated. Likewise, upon thorough investigation, it was established that the respective

Examination to all the incorporators/directors of FEI through registered mail. However, the notices were returned unopened and stamped with "Return to Sender' from the postmaster. On 10 July 2008, the CED served another Notice Requiring Appearance at an

Further, the records of the Commission show that FEI has failed to submit its annual General Information Sheet and Financial Statement since its incorporation.

instant petition for the revocation of corporate registration of FEI. On 21 October 2008, the CED, on the basis of its own findings, filed the

publication of the said Order together with the Summons once in a newspaper of On 20 April 2010, an Order was issued directing the CED to cause the

thirty (30) days. general circulation. In addition, the CED was likewise directed to cause the posting of the said Order and Summons in the Commission's website (www.sec.gov.ph) for

On 21 May 2010, the CED filed a Compliance stating the submission of the following documents:

1. A copy of the Affidavit of Publ ication affirming that the 20 April 2010 and 21 November 2008 Orders of the Office of the General Courisel were pubiished in the Philippine Star on 30

Aprit 2010;8

2 The Certification dated 19 May 2010 from the Director of the Economic Research and Information Department stating that

6 CED's Petition, Annexes D, E, and F. 7 Id., Annexes G, H, I, J and K. 8 CED's Compliance, Annex A.

Compliance and Enforcement Depa:tment, Petitioner SEC Admin. Case No. 10-08-99 (CED Case No. 08-2875) In the Matter of First Equis Inc. Page 3 of 5

the mentioned Orders were posted in the Commission's website:

3. The Certification dated 17 May 2010 from the Director of builetin board at the ground lobby for fifteen (15) days.10 Department stating that the said Orders were posted in the Commission's Human Resource andAdministrative

ISSUE

sufficient ground to revoke FEI's certificate of registration. The sole issue to be resolved in this case is whether or not there is a

We rule in the affirmative.

to the Petition, FEI has yet to file the same. Thus, pursuant to Section 3-1211 of the a consequence, the Commission shall render judgment on the basis of the petition 2006 Rules of Procedure of the Commission, FEI shall be considered as in default. As and available records at hand. Upon the publication of the Order of the Commission for FEI to file its Answer

We now resolve the case or its merits.

power of the Commission to revoke a corporation's certificate of registration on the ground of fraud in procuring the certificate of registration, to wit: Section 6(I)(1) of Presidential Decree No. 9C2-A, as amended provides for the

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

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

1. Fraud in procuring its certificate of registration;

9 CED's Compliance. Annex B.

11 SEC. 3-12. Effect of Failure to Answer. If the respondent fails to answer the complaint within the abovestated period, he shall be considered as in default. The Hearing Panel or Officer shall, motu proprio, proceed to render judgment granting the complainant such relief as the complaint may warrant, unless the Hearing Panel or Officer determines that the complainant should be required to submit ex parte 1 Id., Annex C. additional evidence

Compliance and Enforcement Department, Petitioner In the Matter of First Equis Inc.

(CED Case No. 08-2875) SEC Admin. Case No. 10-08-99 Page 4 of 5

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is the document prepared by the persons establishing a corporation and filed with for brevity).12 It defines the charter of the corporation and the contractual and between the corporation arid the stockholders.1 the Commission containing the matters required by the Corporation Code C'Code' Commission, the filing of its Articies of Incorporation ('AOI') is necessary. The AOI relationships between the State and the Corporation, the stockhoiders and the State, As part of the requirements for FEI's incorporation and registration with the

of the requirement is to fix the residence of the corporation in a definite place, it is now mandatory that all corporations and partnerships applying for registration feasibie, the street number, street name, barangay, city or municipality; and (ii) specific residence address of each incorporator, stockholder, director, trustee or incorporation must state the "place where the principal office of the corporation is to be established or located, which place must be within the Philippines." The purpose instead of allowing it to be ambulatory for effective supervision and regulation of the corporation.14 More so, in line with the "full disclosure" requirement of existing laws, with the Commission should state in their Articles of Incorporation or Articles of partner.15 Partnership the (i) specific address of their principal office, which shall include, if Section 14(3) of the Code specifically provides that the articles of

the time of its application for registration by making use of fictitious or non-existent has not filed its General Information Sheet and Audited Financial Statements as addresses of its principal office and incorporators. Also, since its incorporation, FEI The findings of the CED reveal that FEI falsified its articles of incorporation at

registration of FEI would have been denied pursuant to Section 17 of the Code.16 required by the Commission. Evidently, there is an apparent intention to defraud the Commission and the general public. Had the Commission known of such falsities, the

fabricated and non-existent addresses in its articles of incorporation filed with the From the foregoing, and after having established that FEI employed fictitious,

Commission for purposes of registration, there was a clear violation of Section 6(l)(1) of P.D. 902-A, as amended. Thus, the revocation of the certificate of registration of FEI is warranted.

WHEREFORE, premises considered, the Petition is hereby GRANTED. FEI's

Securities and Exchange Commission may reject the articles of incorporation or disapprove any amendment thereto if the same is not in compliance with the requirements of this Code x x x. 13 Government of the Philippine Islands vs. Manila Railroad Co., 52 Phil. 169 (1929). 16 SEC.-17. Grounds when articles of incorporation or amendment may be rejected or disapproved. The 12 Batas Pambansa Blg. 68 (1980). 14 Young Auto Supply Co. vs. Court of Appeals, G.R. No. 104175, June 25, 1993. 15 SEC Memorandum Circular No. 3, series of 2006.

SEC Admin. Case No. 10-08-99 (CED Case No. 08-2875) Page 5 of 5 In the Matter of First Equis Inc. Compliance and Enforcement Department, Petitioner

Certificate of Incorporation (Reg. No. CS200609642) is hereby REVOKED

dissemination to the general public. The ERID is likewise directed to cause the posting of this Decision in the Commission's website at www.sec.gov.ph. Department for its appropriate action, as well as to the Economic Research and Information Department (`ERID") and the Commission's extension offices for Let a copy of this Decision be furnished to the Company Monitoring

SO ordered.

Mandaluyong City, 01 July 2010.

E B. BARIN Chairperson

R0 W G Ma. Juanita e. cueto Commissioner RAUL J. PALABRICA Commissioner

MANUEL HUBERTO B. GAITE Commissioner /Commissioner ELADIO M/jALA

*on leave