SEC EB Case No. 05-18-444EDUVEGES LIMPAHAN, Appellant, v. COMPANY REGISTRATION AND MONITORING DEPARTMENT, CALINDAGAN LANDHOLDINGS CORPORATION, Appellee.

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

EDUVEGES LIMPAHAN

Appellant.

-versus- SEC En Banc Case No. 05-18-444

represented by its President, AGNES ANDREW FITZ GIBBON. DEPARMENT, LANDHOLDINGS CORPORATION COMPANY REGISTRATION AND MONITORING FLORES and its CALINDAGAN Vice-President. Appellee.

DECISION

or is doing to the great prejudice of or damage of the general public, the Monitoring Department (CRMD which denied the Complaint for procurement and serious misrepresentation as to what the corporation can do "Appeal") filed by Appellant Eduveges Limpahan ("Appellant Limpahan") cancellation/revocation of the Certificate of Incorporation of Calindagan Landholdings Corporation CLC) on the ground of fraud in its dispositive portion of which reads: assailing the Order(Assailed Order) of the Company Registration and Before the Commission is the Appeal dated 10 April 2018 (the

"WHEREFORE, premises considered, the Petition is hereby DENIED

PARTIES

Meciano Road, Taclobo, Dumaguete City which was leased to Appellee Calindagan Landholdings Corporation (Appellee CLC) for commercial and Meciano Road, Dumaguete City, Negros Oriental. As stated in the residential purposes. Complaint, Appellant Limpahan is the owner of a property located in Dr. Appellant Limpahan is of legal age,Filipino and a resident of 73

which has the authority to take cognizance of and act on petitions for revocation of certificates of registration. Appellee CRMD is one of the Commission's operating department

1 Dated 27 March 2018, signed by Atty. Ferdinand B. Sales Director of the CRMD.

the Securities and Exchange Commission (SEC) with SEC Company Registration No. CS20105982. Its principal office is located at Old Bridge, Calindagan, Dumaguete City. The AOI of Appellee CLC provides for the following primary purpose, to wit: laws of the Philippines, having been issued a Certificate of Incorporation by Appellee CLC is a corporation duly organized and existing under the EDUVEGES LIMPAHAN.VS CRMD SEC En Banc Case No.05-1 Page 2 of 15

or real estates and in buildings and other structures at any time owned or held by the corporation. lands and realty, and to own, hold, improve, develop, manage, and operate said land or lands or real estate so acquired, and to erect or cause to be erected on any lands, owned, held, occupied, or acquired by the corporation, buildings and other structures with their appurtenances, and to rebuild, enlarge, alter, improve, or remodel any building or other structures new or hereafter erected on any lands or lands or real estate or interests in lands "To acquire by purchase, lease or otherwise, lands or interest in

CLC,who were also elected as members of the Board of Directors, are as follows: The names, nationalities and residences of the incorporators of Appellee

Gasataya Pardilla Dolores Pardilla Veverly Rosalia Andrew Gibbon Agnes Flores Name Fitz O. F. Nationality Filipino Filipino Filipino Filipino Australian Perdices Street, Purok Mansanitas, Perdices Street, Purok Mansanitas, Dumaguete City Negros Or. Albany, Western, Australia Dumaguete City Negros Or. Perdices Street, Purok Mansanitas, Dumaguete City Negros Or. Dumaguete City Negros Or. Perdices Street, Purok Mansanitas, Perdices Street, Purok Mansanitas, Dumaguete City Negros Or. (Complete Address) Residence

Gibbon (Mr. Gibbon), an Australian national, subscribed to 40% of the total subscribed shares at the time of incorporation. Article VIII of Appellee CLC's AOI provides that Mr. Andrew Fitz

RELEVANT FACTS

CLC on the ground that the latter is engaged in a business that is not Complaint dated 17 January 2017 (the Complaint) praying for the issuance of an Order cancelling/revoking the Certificate of Incorporation of Appellee On 30 January 2017, Appellant Limpahan filed with the CRMD a

EDUVEGES LIMPAHAN yS CRMI

SFCFn RancOasa sanctioned by the purpose clause provided in its Articles of Incorporation. In support thereof, Appellant Limpahan alleged that (a) Appellee CLC's act of engaging in pension house/ho usinessnamed White Knights Page 3 of 15

Dumaguete Pension House Withi Ieas premises owned by Appellant, is not covered by 1C o do business as areal estate developer and(bit Corporation Code since one of its incorpd raTo classified as a temporary visitor, is not allov in the Philippines per

foregoing, the involuntary Dumaguete City Certification dated Appellant dissolut 1 Appellee CLC is warranted under Bureau of Immigration (BI). that on the basis of the

Section 121 of the Corporation Code

May 2017,Appellee CLC prayed for the dismissal of the Complaint for lack of merit.Appellee CLC maintaine In its Answer with Affirmative Defenses and Counterclaim dated 22 GTAO revocation of its certificate of incorporation has no basis Be complied with all the legal requirements under the doin businessin

incorporator did not violate th corporation is not engaged accordance with its prima the inclusion tivit of Mr.Gibbon as anc 1991 since the c it did not

nationality and shareholdings in the corporation commit serious misrepresentation as to fraud in the procurement thereof, since Mr. Gibbon did not conceal his what it can do as a corporation, nor

Commission. a pension house business which is not authorized under its Articles of Incorporation for which reason, its revocation should be granted by the from engaging in business in the Philippines which rendered the incorporation of Appellee CLC infirm as it failed to comply with the required number of incorporators. Appellant Limpahan also maintained that Appellee CLCprocured its Certificate of Incorporation through fraud and carried out Complaint. Appellant Limpahan maintained that Mr. Gibbon is prohibited dated 5 December 2017 which basically reiterated her arguments in the On 11 December 2017,Appellant Limpahan filed her Position Paper

the dismissal of the Complaint which likewise reiterated the arguments in its Answer. On 4 January 2018, Appellee CLC filed its Position Paper praying for

not procured through fraud. The CRMD ruled that the full disclosure in the the finding of CRMD that Appellee CLC's Certificate of Incorporation was In the Assailed Order, the dismissal of the Complaint was based on

Par.5(page 5 of the Answer 6 Pars.7 and 8 of the Answer 4 Par.6(page 6 of the Answer 2 See page 3 of the Complaint 3 Ibid

majority of the incorporators must be a resident of the Philippines. application documents of the personal circumstances Mr. Gibbon as well has also found that the requirements of Section 10 and Section 148 of the investment in the corporation negated the allegation of fraud. The CRMD prohibit a temporary visitor of the Philippines to be an incorporator of a corporation. There is no general requirement of Philippine citizenship in the establishment of a private corporation, since what the law requires is that Corporation Codewere accordingly complied with because the law does not EDUVEGES LIMPAHAN,VS CRMD SECEn Banc Case No.05-18-44 Page 4 of 15

percentage by Republic Act (R.A.) No. 704210, the infusion of money for investment purposes by Mr. Gibbon, a foreign national, is thus allowed. credence to the facts/entries provided in the Articles of Incorporation of since Appellee CLC is a domestic Filipino corporation engaged in a business where foreign participation is not prohibited or limited to a smaller corporation and used the other four (4) incorporators as dummies after finding that no evidence was shown in support thereof. The CRMD gave Appellee CLC which were made under oath. The CRMD then ruled that The CRMD also dismissed the allegation that Mr. Gibbon formed the

house is sanctioned by its primary purpose provided in its Articles of Incorporation as a real estate developer. misrepresentation as to what it can do or is doing to the great prejudice of or damage to the general public after finding that the operation of a pension Finally, the CRMD ruled that Appellee CLC did not commit serious

Hence the instant Appeal.

ISSUES

(2 (1 of Incorporation that warrants the revocation thereof. Whether Appellee CLC's serious misrepresentation as to what it can do Whether fraud attended the procurement of Appellee CLC's Certificate

or is doing as a corporation warrants the revocation of its Certificate of Incorporation.

national, not otherwise disqualified by law may, upon registration with the SEC, do business as defined in Section 3 (d) of said Act, or invest in a domestic enterprise up to one hundred percent (100%) of its capital, unless participation of non-Philippine nationals in the enterprise is prohibited or limited to a smaller percentage by existing law or under the provisions of Foreign Investments Act of 1991. Philippines, may form a private corporation for any lawful purpose or purposes. Each of the incorporators file with the Securities and Exchange Commission articles of incorporation in any of the official languages duly signed and acknowledged by all of the incorporators, containing substantially the following matters, except as otherwise prescribed by this Code or by special law: 1 Section 5 of R.A. No. 7042, as amended, provides that a without need of prior approval, a non-Philippine five (5) but not more than fifteen (15, all of legal age and a majority of whom are residents of the of s stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the Section 14. Contents of the articles of incorporation. - All corporations organized under this code shall 9 Batas Pambansa Blg. 68. 7 Section 10. Number and qualifications of incorporators. - Any number of natural persons not less than corporation. (6a) 5. The names, nationalities and residences of the incorporators; XXX. XXX

(3 Whether the non-registration of the investments of Mr. Gibbon, a foreign national, disqualifies him from being an incorporator and warrants the revocation of Appellee CLC's Certificate of Incorporation EDUVEGES LIMPAHAN,VS CRMD SEC En Banc Case No.05-18-44 age5 of15

RULING

The Appeal has no merit.

I The Certificate of Incorporation

ofAppelleeCLCwas not fraudulently procured.

incorporator of Appellant CLC and warrants the revocation of Appellee reversible error in finding that the procurement of Appellee CLC's Certificate in forming the corporation in violation of the immigration laws, specifically the conditions allegedly provided in his travel documents i.e. he cannot do gainful activity, constitutes bad faith which is equivalent to fraud. This, according to Appellant Limpahan disqualified Mr. Gibbon from being an CLC's certificate of registration.i of Incorporation was not attended by fraud. She argued that Mr. Gibbon's act In her Appeal, Appellant Limpahan maintained that CRMD committed

Appellant Limpahan's arguments are misplaced and baseless.

ground that the same was fraudulently obtained is specifically authorized under Section 6 (i)(1) of PD 902-A , as amended, to wit: The revocation of a certificate of registration of a corporation on the

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

1 To suspend, orrevoke,afterpropernoticeand

hearing,the franchise or certificate of registration of of the grounds provided by law, including the following: corporations,partnershipsorassociations, upon any

1)Fraud in procuring its certificate of registration; xxx"

Inc. vs Securities and Exchange Commission,12 where the Court categorically unqualified sense. The foregoing finds affirmation in Care Best International, ruled, thus: The afore-quoted provision used the word fraud in its generic and

11 Page 8 of the Appeal 12 GR No. 215510. October 5, 2015

or positive fraud proceeds from an intentional deception material fact. Constructive fraud is construed as a fraud because to commit positive fraud or injury upon other persons.Since "Fraud can be classified as either actual or constructive. Actual practiced by means of the misrepresentation or concealment of a of its detrimental effect upon public interest, and public or private confidence, even though the act is not done with an actual design limiting its u Section 6(i 0tT CT then the section must include not only simply speaks of fraud without EDUVEGESLIMPAHAN PS CRML SECEn Banc Case No.05. Page 6 of 15 A

actual fraud. but TWE fraud as well.Since the provision is not conce rned.witl ne or a felony, criminal intent or intent to deceive is not essentia Consequently, even assuming that

detract from the undisputed commission of the falsity when they incorporators Evita used fictitious names in petitioner's Articles of Incorporation. (Emphasis supplied) and Solivio were in good faith does not

association refers to fraud that is the fraud contemplated in Section 6 (i)(1) of PD No.902-A as a ground for the revocation of a certificate of registration of a corporation, partnership or must be contained or connected with to the Commission for the reg It should however G attendant in the registration and the same cuments and/or papers presented be said corporation, partnership or emphasized that

certificate of registration others,a have provided fals incorporators" association.13 Consistent with t 4bhave included e Commission has revoked the cation Numbers (TIN of its i have been found to, among aS an incorporator,15 c have submitted articles of inco document was executed and notarized17 and by-laws bearing a signature of an incorporator who could not have signed and acknowledged the execution of the same as he was abroad when the signatures of incorporatorst and (d) ha mitted articles of incorporation -laws which contained forged

provides for the qualifications of incorporators, to wit: Relative to the instant case, Section 10 of the Corporation Code

13 In the Matter of Silvermoon Security & Investigation Agency, Inc., et al., SEC Case No. 12-05-99 citing In the Matter of Charlyn Marketing Enterprise, SEC Case No. 03-05-49.

1 In the Matter of Terracota Villas, Inc.vs Enforcement and Prosecution Deparment (SEC Admin Case No. content/uploads/2019/12/2014RevocationPR CARAGAIndigenousPeoplesManagementandDevelopmentC 14 See (a) In the Matter of Caraga Indigenous Peoples Management and Development Corporation (URL: orporation.pdf), (b) In the Matter of Revocation of the Articles of Incorporation of Domel Realty & 15 See Esmar Posadas Realty Corporation vs Dir. Ferdinand Sales (SEC En Banc Case No. 08-13-298) 16 See In the Matter of Zanjera De Cabarambanan, Inc. (SEC Admin. Case No. 11-06-84) 11-11-137 Development Corporation (SEC En Banc Case No. 02-11-229 https://www.sec.gov.ph/wp-

supplied) residents of the Philippines, may form a private corporation s stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation." (Emphasis number of natural persons not less than five (5) but not more than fifteen (15), all of legal age and a majority of whom are for any lawful purpose or purposes. Each of the incorporators of "Section 10. Number and qualifications of incorporators. - Any EDUVEGES LIMPAHAN YSCRML SEC En Ban EasaMnns Page 7 of 1s

verba legis rule, this provision must be given its literal meaning and applied capital stock can be an incorporator of a corporation. Consistent with the without attempted interpretation.18 any natural person, who is of legal age, complies with the residency requirement, and owns or has subscribed to at least one (1) share of the The afore-quoted provision is clear and categorical in stating that

Incorporation of Appellee CLC Appellee CLC complied with all th 10 of the Corporation Code. Ir In the instant case, the records will show that the incorporators of X show that he is a natural person. Mr.Gibbonthe Articles of ents prescribed under Section

the corporation. The CRM in Section 10 of the Corpo of legal age,a resident of Dur validly be an incorporator Ai0F prohibits or disqualifies an alien d Australia, and owns shares of holding that Mr. Gibbon can sidering that there is nothing

classified as temporary ViSit0 ncorporator of a corporation, the Commission cannot rule other TSe Commission notes that Appellant Limpahan herself admitted/affirmed in her Appeal that the Corporation Code does not prohibit a foreigner from becoming an incorporator in a domestic corporation.i

make a determination on the same and impose the proper sanction(s) Laws are not lodged with the Commission, but with the Bureau of Immigration. If Appellant Limpahan believes that Mr. Gibbon violated the provisions of the Immigration Laws, her recourse is not with the Commission but with the Bureau of Immigration which has the power and authority to Gibbon allegedly violated and which she used in arguing that Mr. Gibbon is disqualified to be an incorporator is both misplaced and has no basis in law. The administration and implementation of the provisions of Immigration Appellant Limpahan's reliance on the Immigration Laws which Mr.

Commission is required to act and pass upon any application filed with it disqualifications of persons as incorporators are governed and provided in the Corporation Code. The determination of whether there has been compliance with the provisions of the Corporation Code is ministerial in nature, where the Moreover, it should be emphasized that the qualifications and

19 See pages 7-8 (on the "First Assignment of Error") of the Appeal 18 Cubillo v. Social Security System (G.R. No. 221067 (Notice), January 14, 2019)

EDUVEGE EC En Banc Case No. IMPAHAN,Vs CRM A merely on the basis of the documents submitted. This was emphasized by the Supreme Court in Ridon v. AXN Networks Phils., Inc.20, thus: Page 8of15

judicial or quasi-judicial capacity.(Emphasis supplied) the process of incorporation, the SEC is clearly not acting in any compliance with the list of requirements of the Code. Thus, in corporation, is not called upon to adjudicate the rights of contending parties or to exercise, in any manner, discretion of a judicial nature: nor does it conduct investigations and then draw conclusions from them as basis for its actions. What it does is merely to verify the documents submitted for incorporation in order to "The SEC, in issuing certificates of registration in favor of a determine if there has been substantial

before a notary public.22 are complied with, Section 1421 of the Corporation Code mandates the in the articles of incorporation (AOI) which is required to be acknowledged inclusion of the names, nationalities and residences of the incorporators To ensure that the requirements in Section 10 of the Corporation Code

procurement thereof as contemplated under Section 6(i)(1) of PD 902-A incorporators was fully disclosed. Appellee CLC was not bound to application for incorporation, contrary to the assertion of Appellant Incorporation and By-laws of Appellee CLC were not shown to contain any disclose information not required by the Corporation Code in relation to its Limpahan23. It cannot thus be faulted or penalized for not providing an information which is not required by laws. More importantly, the Articles of false information or forged signature which would amount fraud in the the Corporation Code relating to the personal circumstances of its CLC will readily show that all information required under Section 14 of Again, a careful review of the Articles of Incorporation of Appellee

of the CRMD that the certificate of registration of Appellee CLC was not fraudulently procured. On the basis thereof, We find no cogent reason to disturb the finding

I. Appellee CLC's operation of a

pension house is authorized by

20 G.R. No. 210885 & 210886 (Notice), [August 26, 2014] 21 Section 14. Contents of the articles of incorporation. except as otherwise prescribed by this Code or by special law: file with the Securities and Exchange Commission articles of incorporation in any of the official languages duly signed and acknowledged by all of the incorporators, containing substantially the following matters, . - All corporations organized under this code shall

XXX

22 See Sections 11, 14 and 15 of the Old Corporation Code. 23 See "Third Assignment of Error" (page 9) in the Appeal The names, nationalities and residences of the incorporators; xxx

its Primary Purpose; it is not an EDUVEGES LIMPAHAN.Vs CRMD SECEn Banc Case No.05-18 Page 9 of 15 44

ultra vires act.

of its certificate of registration pursuant to Section 6(i)(2) of PD 902-A. its primary purpose provided in its Articles of Incorporation. This, according to Appellant Limpahan, constitutes serious misrepresentation as to what CLC in operating a pension house is an ultra vires act as it is not covered by Appellee CLC can do or is doing as a corporation that warrants the revocation In her Appeal, Appellant Limpahan alleged that the act of Appellee

We do not agree.

law.24 In Rural Bank of Milaor v. Ocfemia25, the Supreme Court defined the concept of ultra vires, thus: and power under its Articles of Incorporation to do or make. These unauthorized acts are also called ultra vires acts of corporations, or acts committed outside the object for which a corporation was created as defined by law of its organization and thereof beyond the powers conferred upon it by which under Section 612) of PD 902-A,as amended, exists if a corporation performs an act or carries out transactions which are not within its authority Serious misrepresentation as to what the corporation can do or is doing

"The language of the Code appears to confine the term ultra vires to an act outside or : bevond express, implied and incidental corporate powers. Nevertheless, the concept can also include those acts that may ostensibly be within such powers but are, by general or special laws, either proscribed or declared illegal.In general, although perhaps loosely, ultra vires has also been used to designate tho eboardot direct of corporate officers when a of authority In the context that G rticle 45 of the Corporation 0G and not susceptible to corporation ma atifi0 act, one considers the logical not a

in a substantial and not merely in a remote and fanciful sense, it may be fairly considered within corporate powers. if the act were one which is lawful in itself or not otherwise prohibited and done for the purpose of serving corporate ends or reasonably contributes to the promotion of those ends (Emphasis supplied) and necessary relation between the act assailed and the corporate purpose expressed by the law or in the charter. For

Express powers are those which are enumerated in Section 36 of the A corporation has both express and implied or incidental powers

24 Republic v. Acoje Mining Co., Inc., G.R. No. L-18062, February 28, 1963. 25 G.R.No. 137686,February 8,2000

EDUVEGES LIMPAHAN.VS CRMD SFCFn.Banc.Case.No os- 18

to its existencewhich may be essential or necessary to carry out its these powers are ultra vires acts and the statutory provision prohibiting them is Section 45 of the Corporation Code. Corporation Code and those which are sanctioned by the State in the corporation's articles of incorporation. Implied or incidental powers, on the other hand, are the corporation's "powers, attributes and properties incident purpose or purposes as stated in its articles of incorporation.Acts beyond Page 10 of 15

Supreme Court laid down the test in determining if an act is ultra vires within the contemplation of the Corporation Code, thus: In the case of Montelibano v. Bacolod-Murcia Milling Co.,Inc.26,the

"It is a question, therefore, in each case, of the logical relation of the act as to the corpora act is one which is lawful itself, and not otherwise prohibited, is ose expressed in the charter. If that

done for the M corporate ends, and not in a remote and fanciful sense, it may fairly be considered within the charter powers. TThe test to be pplied is whether the act in

supplied) question is in direct and immediate furtherance of the corporation's business, fairly incident to the express powers and reasonably necessary to their exercise. If so, the corporation has the power to do it: otherwise, not." (Emphasis

and developed is clearly authorized by its constitutional documents. structures new or hereafter erected on any lands or real estates. The operation of a pension house on a leased building which Appellee CLC has improved hold that the operation by Appellee CLC of a pension house is an act that is covered by and authorized under its primary purpose which includes, among development or management of the same, (b) to erect or cause to be erected on the land acquired or leased by the corporation, buildings and structures. and (c) to rebuild, enlarge, alter, improve, or remodel any building or other others, (a) the acquisition or lease of land or realty, and the improvement. On the basis of the foregoing, We affirm the finding of CRMD and so

promote or further the business of the corporation. provided in the purpose clause of Appellee CLC, the same can nonetheless be considered as an exercise of an implied/incidental powers because it is essential or necessary in carrying out its primary purpose and/or will directly Granting, ex gratia, that the operation of pension house is not expressly

as the Real Estate Service Act of the Philippines (RESA Law),to wit:Real estate developer refers to any natural or juridical person engaged in the of real estate developer in Section 3e) of R.A.No.964627 otherwise known Moreover, the Commission takes administrative notice of the definition

26 GR No. L-15092, 18 May 1962 27 29 June 2009

business of developing real estate development project for his/her or its own thereof is within the afore-quoted definition of Real Estate Developer which under the RESA Law,CLC is authorized to lease the real estate it developed account and offering them for sale or lease.The operation of a pension house which involves the leasing out to the public of the entire building or portions EDUVEGES LIMPAHANVS CRMD SEC En Banc Case No.05-18- Page11of 15

the finding of CRMD that Appellee CLC did not commit serious warrant the revocation of its corporate charter. misrepresentation as to what it can do or is doing as a corporation that will On the basis thereof, the Commission finds no cogent reason to disturb

I. The. non-registrationof a

foreign national is not a ground for revocation of the certificate of registration of a corporation.

Bureau of Investment.28 Appellant Limpahan then concluded that the its incorporators, Mr. Gibbon, is prohibited from doing business in the Philippines. (the "Foreign Investments Act of 1991 or FIA) to justify the alleged illegal acts of Mr. Gibbon.She maintained that Mr. Gibbon should have been penalized for his act of registering Appellee CLC under the Corporation Code instead of the FIA, and for his failure to register his investments with the certificate of registration of Appellee CLC should be revoked because one of committed reversible error in misapplying Section 5 of Republic Act No.7042 In her Appeal, Appellant Limpahan maintained that the CRMD

jurisprudence. Appellant Limpahan's arguments have no basis in law and

incorporator of a domestic corporation having been addressed and disposed of in the earlier part of this decision, the same will no longer be discussed in this The issue on the eligibility or qualification of Mr. Gibbon as an

section.

valid incorporation pursuant to the provisions of the corporation code29, and pursuant to the provisions of the FIA, the Commission finds the same to be patently erroneous. In our jurisdiction, there are only two (2) ways where a corporation can validly and legally come into existence i.e. first, is through a of Appellee CLC is invalid and should be revoke because it was not obtained In relation to the position of Appellant Limpahan that the registration

shares held are stock corporations. All other corporations are non-stock corporations." 28 See page 9 (on the "Fourth Assignment of Error") of the Appeal to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the 29 Section 3 of the Corporation Code provides: "Corporations formed or organized under this Code may be stock or non-stock corporations.Corporations which have capital stock divided into shares and are authorized

second, is through a special law or charters30. In National Power Corporation EDUVEGES LIMPAHAN.Vs CRMD SEC En Banc Case No.05-18-4 Page12 of 15

v.City of Cabanatuan31,the Supreme Court affirmed the foregoing,thus

In its general signification, a franchise is a privilege conferred by government authority, which does not belong to citizens of the country generally as a matter of common right. In its specific sense, a franchise may refer to general or primary franchise, or to a special 0r secondar franchise.The former relates to the right to exist itionby virtue of duly approved articles rAn oursuant to a special law he right under a primary or genera the individuals who compose the ration itself. On the other hand, the latt rivileges conferred upon an existin IT Th nt to use the streets of a municipality to lay pipes of tracks arac poles or string wires.

the corporation and may ordinarily be conveyed or mortgaged under a general power granted to a corporation to dispose of its property, except such special or secondary franchises as are charged with a public use. (Emphasis supplied) The rights under a secondai special franchise are vested in

of law.32 The alleged failure of Mr. Gibbon to register his investments with under the Corporation Code or PD 902-A. In Hutchison Ports Philippines the effect of a failure of an alien or a foreign entity doing business in the Philippines to register and secure a license is to deny the same access to the By-laws, and the issuance of its certificate of incorporation, Appellee CLC came into existence as a corporation, an artificial being created by operation the SEC did not affect the existence of the Appellee CLC.Neither does the same constitute a ground for revocation of a certificate of incorporation Limited vs Subic Bay Metropolitan Authority33,the Supreme Court ruled that with the approval by the Commission of its Articles of incorporation and Having been duly formed and organized under the Corporation Code

courts, thus:

"The primary purpose of the license requirement is to compel a foreign corporation desiring to do business within the the state and to enable the government to exercise this country.If a foreign corporation operates a business in the Philippines without a license, and thus does not submit itself Philippines to submit itself to the jurisdiction of the courts of jurisdiction over them for the regulation of their activities in

30 Section 4 of the Corporation Code provides: "Corporations created by special laws or charters shall be 33 G.R.No. 131367. August 31, 2000 governed primarily by the provisions of the special law or charter creating them or applicable to them, supplemented by the provisions of this Code, insofar as they are applicable. 31 G.R. No. 149110, [April 9, 2003], 449 PHIL 233-262 32 See Section 2 of the Corporation Cod

EDUVEGES LIMPAHAN.VS CRMD SEC En Banc Case No. XEH

to Philippine laws, it is only just that said foreign corporation Page13 of 15

be not allowed invoke them courts when the need arises."While forei investoi alwa welcome in this land to collaborat ef tae must be prepared and be bound by Philippin bar." The requiremen foreigr corporation lack 0f capacity to sue isl 11A10 policy Accordingly,petition itated to bring this petition C 110 it is a

requisite license."(Emphasis supplied) foreign corporation doing business in the Philippines without the

ground for revocation, the corporate existence of Appellee CLC should be upheld. is the same a requirement for incorporation as adamantly insisted by requirements prescribed under the Corporation Code and applicable rules Commission, resulted in its incorporation. In the absence of a law providing that the failure to submit proof of inward remittances constitutes a valid requirement for one to be an incorporator of a domestic corporation; neither and regulations, which. was duly Appellant Limpahan34 Moreover, it bears emphasis that proof of inward remittances is not a The compliance by Appellee CLC with all the verified and ascertained by the

the CRMD to conduct actual hearing. Limpahan that she was denied due process as a consequence of the failure of Finally, the Commission finds no merit in the allegation of Appellant

to be heard before judgment/decision was rendered, the demands of due process are met/complied with.35 Moreover, the exercise of the right to be heard is not limited to presentation of evidence in a hearing or conference conducted, as it can also be made through submission of pleadings. Hence, a proceedings.3 In Montemayor bs Bundalian37, the Supreme Court applied the formal or trial type hearing is not, at all times, necessary in an administrative foregoing rule, to wit: administrative proceedings is simply an opportunity to explain one's side or an opportunity to seek reconsideration of the action or ruling complained of If it can be shown that the parties were given fair and reasonable opportunity It is an established principle that the essence of due process in

theopportunity "The essence of due process in administrative proceedings is to explainone'sside or seek reconsideration of the action or ruling complained of. As long

34 See page 9 (on the "Third Assignment of Error) of the Appeal 35 Magcamit vs Internal Affairs Service-PDEA. (GR No.198140, January 25, 2016) 36 Samalio v. Court of Appeals 37 G.R.No. 149335, 01 July 2003

as the parties are given the opportunity to be heard before judgment is rendered, T demands of due process are EDUVEGES LIMPAHAN,VS CRML SECFnBanc.Case No.05-18 Page 14 of15

sufficiently met.In the case at bar, the PCAGC exerted efforts to notify the but his Philippine residence may, petitioner cannot because he failed to ant. Petitioner voluntari AGC by partici A duly represented bmitted documeni reconsider the President Appeals. h investigatio 0 ur deficiency requiremen oe the procedure adopted IBe PCAGO the investigation. (Emphasis supplied)

her case. hereby DENIED for lack merit. by her attendance in the preliminary conference held on 07 November 2017 and the filing of her pleadings which have formed part of the records of the case.These negates Appellant Limpahan's allegation that she was deprived of due process because through the said pleadings, she was clearly able to present given ample opportunity to be heard and present evidence to support her allegations. In fact, she actively participated in the proceedings as evidenced In the instant case, the records show that Appellant Limpahan was WHEREFORE, in view of the foregoing, the instant Appeal is

SOORDERED.

Pasay City, Philippines; 22 March 2021.

EMILIO B QUINO

Chair person

EPHYRO LUIS B.AMATONG Commissioner [On Leave] JAVEY PAUL D.FRANCISCO Commissioner

EDUVEGES LIMPAHAN,VS CRMD SECEn Banc Case No.05-18-444 Page 15 of 15

KELVILESTER K.LEE Commissioner KARLOS.BELLO Commissioner