SEC Adm. Case No. 10-05-92 Julian T. Ong vs. Circle J Corporation et. al.

Securities and Exchange Commission SEC Bldg. EDSA, Greenhills, Mandaluyong City Department of T:ade and Industry Renublic of the Philippines

JULIAN T. ONG Petitioner, -versus- For: Involuntary Dissolution SEC Case No. 10-05-92

CIRCLE J CORPORATION HELEN JO CHUA, CRISTINA S.CANIZARES, and KEN B. NAVEA, Respondents.

DECISION

of Batas Pambansa Blg. 68 (the Petitiont', for brevity) dated 11 October 2005 filed on 21 October 2005 by Julian T. Ong C'petitioner' against Circle J Corporation (`Circle J'?, Helen Jo Chua, Cristina S. Canizares, and Ken B. Navea C'individual respondents'?. For consideration is the Petition for Involuntary Dissolution Under Section 121

D199700981 to engage in getieral construction and other allied businesses. Circle J was incorporated on 9 September 1997 under SEC Registration No.

Petitioner prays for the dissolution of Circle J based on the following grounds:

themselves different and conflicting titles, designations and/or positions in. Circie J without the benefit of a meeting of its stockholders; 1. Individual respondents arrogated and usurped unto

for harassment, the perpetuation of fraudulent schemes and Statement of Management's Responsibility dated 26 April 2004; machinations, and forgery and falsification of documents, as shown by the allegedly forged signatures of petitioner in various contracts purportedly entered into by Circie ] and in the corporation's lone and 2. Individual respondents have been using Circle 3 as a tool

reportorial requirements for corporations, i.e. General. Information Sheet (`GIS'? and Financiai Statements (`FS'). 3. Circle J failed to consistently file the mandatory annual

reportorial reguirements is tota!!y inaccurate, and that assuming this to be true, petitioner shouid be the first person to be blamed, being the corporation's President. In their Answer respondents argue that the allegation of non-filing of

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Ong vs. Circle J. Corporation, et at. SEC Case No. 10-05-92 Page 2 of 4

meeting, the truth being that their appointments are pursuant to and by virtue of harassment of them. Respondents allege that petitioner had already previously filed/initiated intra-corporate and criminal cases against them, and that, consequently, they filed criminal cases against petitioner. They deny that they arrogated and usurped unto themseives different and conflicting tities, designations and/or positions without the benefit of a stockholders Board actions with the direct participation and approval of petitioner not only as such President but also as a director of the corporation. Lastly, the aliegations of fraudulent schemes, respondents contend, are all but manifestations of petitioner's

January 2006 and 11 January 2006, respectively. Petitioner and respondents filed their Memoranda/Position Papers on 6

indubitably belongs to this Commission, pursuant to Section 6(I) of Presidentiai Decree No. 902-A ('PD 902-A'), as amended, which reads: Jurisdiction over actions for revocation/caricellation of corporate franchise

Commission shall prssess :he following powers: xxx xxx xxx "Section 6. In order to effectively exercise such jurisdiction, the

I) To suspend, or revoke, after proper notice and hearing, the franchise upon any of the grounas provided by law, inciu:ding the following: or certificate of registration of corporations, partnerships or associations,l

1. Fraud in procuring its certificate of registration;

is doing to the great prejudice of or damage to the general public; 2. Serious misrepresentation as to what the corporation can do or

3. Refusal to comply or defiance of any lawful order of the to a grave violation of its franchise; Commission restraining commission of acts which would amount

4. Continuous inoperation for a period of at least five (5) years;

5. Failure to file by-laws within the reguired period; and

6. Failure to file required reports in appropriate forms as

(Emphasis ours). determined by the Commission within the prescribed period; xxx."

incorporation, pursuant to Section 22 of the Corporation Code ('the Code'?, and for may likewise be revoked for failure to formally organize and commence the transaction of its business or the construction of its works within two years from its violations of any of the provisions of the said Code or its amendments not In addition to the foregoing grounds, a corpo:ation's certificate of registration

specifically penalized therein, a:s provided in Section 144 thereof.

'Batas Pambansa Bilang 168 (1980)

Ong vs. Circle J. Corporation, et al. Page 3 of 4 SEC Case No. 10-05-92

Circle J's certificate of registration. The issue now is whether sufficient grounds exist to warrant the revocation of

as commercial courts.? usurped unto themselves different and conflicting titles, designations and/or directors, trustees, officers or managers of such corporations, partnership or associations; are now cognizabie by concerned regional trial courts designated positions in Circle J without the benefit of a meeting of its stockholders), the same hence, involves an intra-corporate controversy. It is now settled that intra-corporate goes into the validity of respondents' tities, designations and/or' positions, and disputes, which inc!ude controversies in the election or appointment of Anent the first ground (i.e., that individual respondents arrogated and

of vehicles, machineries and equipment from Circle J4 subjects of the' Deeds of Absolute Sale alleged to have been falsified/forged. It is likewise not disputed by petitioner that he filed a civil (arguably, intra- corporate) case against the respondents for Recovery of Possession with Replevin Hence, the Commission, under the circumstances, must exercise prudence, in due deference to the court and the DOJ. Circle J as a tool for harassment, the perpetuation of frauduient schemes and forged signatures of petitioner in various contracts purportedly entered into by struggle between the parties, and is intricately connected with cases pending before different judicial fora. It is not disputed by petitioner that the alleged falsifications and forgeries are now pending investigation by the Department of Justice ('DO]'.3 machinations, and forgery and faisification of documents, as shown by the allegedly Circie J and in the corporation's lone Statement of Management's Responsibility dated 26 April 2004), it is not per corporation's certificate of registration. As to the 'second ground (i.e., that individual respondents have been using r se a ground for the revocation of the Rather it mainly reflects the internal 4, which may'very well be the

cleariy manifested." Allegations of falsification and forgery, even for administrative they could just be made or invoked. The Report is not substantial proof of the the questioned documents were falsified or forged because such documents were mere photocopies wherein minute details and other elements of handwriting are not proceedings, cannot be taken lightiy, especially considering the facility with which alleged falsifications/forgeries. unsubstantiated. Questiored Locumer:t Report No. 110-05, on which this ground.is solely based, clearly states that nio definite conclusion can be rendered on whether At any rate, even if we were to consider such ground, the same, however, is

before the Regional Trial Court of Cagayan de Oro City, Branch 17. (See page 5 of Answer, and page 3 of 2Section 5.2 of Republic Act No. 8799, or the Securities Regulation Code of 2000, in relation to Section 5 of PD 902-A, as amended. 3See Answer and Position Paper of respondents, in relation to the Memorandum of petitioner. 4Civil Case No. 2005-103 entitled Masterwood Enterprises Corporation vs. Helen Chua and John Does pending 'Specimen Documents "Q-67", "Q-68" and "Q-69" (Annex "C-1" of the Petition). Annex "C-3" of the Petition. respondents' Position Paper, in relation to petitioner's Memorandum).

Ong vs. Circle J. Corporation, et at. Page 4 of 4 SEC Case No. 10-05-92

therewith.7 Properly and reasonably construed, the phrase " not otherwise specifically ground for involuntary dissolution of the corporation'1o must be stressed that Section 144, while seemingly all-encompassing in nature in penalized therein' should mean that. even when the provision seems' to be under the said Section should not be made to apply.8 Thus, Section 144, being an amended version and a substantial reproduction of Section 190-1/7 of the old Corporation Law9, was not intended to make every casual violation of the Code a petitioner failed to pinpoint specific violations'of the said statute. Be that as it may, it that it imposes criminal liability for "violations of any of the provisions of this Code that every non-compliance with the provisions thereof would entail criminal liability. Such a construction would seem too harsh, making the corporation a very unattractive medium for commerce. The "violations" covered thereby should include only those provisions in the Code which are expressiy mandatory in nature to show the true intent of Congress to impose a penal sanction for non-compliance mandatory and the violation thereof is a serious breach, when the particular provision aiready provides for a specific penalty or sanction, the penal sanction or its amendments not specifically penalized therein', cannot be construed to mean To be sure, petitioner also invokes Section 144 of the Code; however, A

Company Registration and Monitoring Department already issued on 8 April 2010 an Order revoking Circle J's certificate of registration for the company's failure to file the required reports within the prescribed periods. Anent the third ground (i.e., non-filing of reportorial requirements), the

DISMISSED. WHEREFORE,premises considered, the instant Petition s hereby

SO ORdERED.

03 June 2010, Mandaluyong City.

#e 6. BARI Chairperson

MA. JuAnIta E. cueto Commissioner N RAUL J. PALABRICA Commissioner

MAnuEl HoBertO B. GAItE Commissioner EVADIO ommidsioner AL:

8Ibid, p. 872. Act No. 1459, which took effect on I April 1906. Supra, Note 7, citing Government of the Philippine Isiands vs. El Hogar Filipino (50 Phil. 399) Pesar Lapuz Villanueva, Philippine Corporate Law 870-871 (2006).

*on leave