SEC Adm. Case No. 04-07-0044 Vicsev Realty and Development Corporation

Republic of the Philippines Securities and Exchange Commission SEC Bldg., EDSA, Greenhills, Mandaluyong City

VICSEV REALTY AND DEVELOP- MENT CORPORATION. -versus- Appellant, For: Appeal from an Order of SEC En Banc Case No. 04-07-0044 Revocation dated 23 March 2006 by the Company Registration and

BENITO A. CATARAN, in his Monitoring Department

capacity as Director of the

MONITORING DEPARTMENT, COMPANY REGISTRATION AND Appellee.

DECISION

For consideration is the Letter-Appeal of Appellant Vicsev Realty and

issued by the Company Registration and Monitoring Department (CRMD) dated 23 Development Corporation (Vicsev) dated 23 February 2007 appealing the Order March 2006, revoking Vicsev's Certificate of Incorporation.

FACTS OF THE CASE

In the application for incorporation of Vicsev, Ramon Cruz, one of the incorporators thereof, executed a Deed of Assignment transferring all his rights and interests in two (2) parcels of land covered by Transfer Certificates of Title (TCT)

exchange for 104,000 shares of Vicsev's outstanding capital stock. Nos. T-103993 and T-105015, both located in Tanza, Cavite, in favor of Vicsev in

On 11 December 2003, CRMD issued Vicsev's Certificate of Incorporation (SEC Registration No. CS200324512) with a condition that Vicsev must submit, within ninety (9o) days from the date of incorporation, the proof of transfer to its name of

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the aforesaid TCTs.1 However, Vicsev failed to comply with the said condition within the prescribed period.

During a conference of CRMD with Vicsev on 19 October 2005, the latter

Internal Revenue. Thus, CRMD apprised Vicsev of the consequences of its non- informed CRMD that the aforesaid TCTs have not yet been transferred to Vicsev's name due to deiays in the Department of Agrarian Reform and the Bureau of compliance with the SEC requirements.

On 23 March 2006. CRMD issued the assailed Order revoking Vicsev's

therein. Certificate of Incorporation for failure to comply with the conditions incorporated

in a letter dated 26 January 2007, CRMD informed Vicsev that its Certificate of Incorporation had already been revoked on 23 March 2006. On 10 January 2007, Vicsev submitted the required TCTs to CRMD. However,

In a letter-appeal dated 23 February 2007, Vicsev requested the lifting of the aforesaid Order of Revocation alleging as follows:

1. The parcels of land are agricultural lands, and to register and transfer the

2. Vicsev was required to secure from the Bureau of Internal Revenue (BIR) 3. There were supervening events that contributed to the delay, i.e., a fire titles in its name, Vicsev had to secure clearances from the Municipal another long list of requirements; Agrarian Reform Office and the Provincial Agrarian Reform Office of the to the long list of requirements; a Certificate of Authority to Register, which also took some time owing to Department of Agrarian Reform, a process which took some time owing

gutted a portion of the Office of the Register of Deeds and the political

4. After securing clearances from the aforesaid government agencies, Vicsev had to comply also with the stringent list of requirements at the Office of the Register of Deeds. controversy at the Provincial Capitol Building which resulted in the barricading of the premises by the supporters of Governor Maliksi; thus, preventing the public from transacting business therein; and

On 25 September 2007, an Order was issued directing CRMD to file its Reply Memorandum. On 09 October 2007, CRMD filed its Reply Memorandum contending as follows:

1. Vicsev's Certificate of Incorporation was approved on 11 December 2003 with a corresponding letter attached thereto, informing Vicsev that the

1 As required by the Securities and Exchange Commission Guidelines Covering the Use of Properties that Require Ownership Registration as Paid-up Capital of the Corporation dated 15 November 1994.

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3. From the time of approval of Vicsev's Certificate of Incorporation up to 23 4. Vicsev cannot invoke the defenses in its letter-appeal since it never filed a Vicsev was properly notified of the requirement of the Commission when forth in the Guidelines Covering the Use of Properties that Require Ownership Registration as Paid-up Capital of the Corporation; it received the ietter dated 11 December 2003 and in the conference held on 19 October 2005; March 2006, Vicsev did not comply with the requirements of the titles transferred in its name from 11 March 2004 to 10 January 2007. request alleging justifiable reasons for the extension of the prescribed period. Commission. Vicsev was therefore delinguent in the submission of the approval of the Certificate of Incorporation is subject to the conditions set

ISSUE

aside the Order revoking Vicsev's Certificate of Incorporation. The sole issue in the present appeal is whether the Commission should set

RULING

The answer is in the NEGATIVE.

Require Ownership Registration as Paid-up Capital of the Corporation ("the Guidelines") provides: Paragraph 1(a) of the SEC Guidelines Covering the Use of Properties that

paid-up capital of stock corporations: requiring ownership registration, such as motor vehicles, sea corporations, the following guidelines are hereby adopted by the vessels, aircraft, firearms and shares of stock, which are used as Commission, in connection with land, and other properties "In the interest of investors and creditors in stock

1 That where any of the aforesaid properties is conveyed to a

application filed thereon shall be subject to the following of the latter. the Commission's approval of the related corporation as payment on subscription to the shares of stock conditions:

a. Where the payment made is in the form of land, the transferee-corporation, is submitted to this Commission the application extendible for justifiable reasons; shall be held in escrow by the Commission and shall be certificate of ownership thereon, in the name of the within ninety (90) days from the date of approval of corresponding shares of stock to be issued thereon released only after proof of the transfer of the

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XXX XXX XXX

2. That the non-submission of the documents as required above, within the prescribed period, after due notice and

the institution of appropriate action as the Commission may hearing, shall be sufficient ground for the revocation of the related application approved by the Commission or for

deem fit under the circumstances.

XXX XXX xxx"(emphasis supplied)

under Sections 6(i) and 6(I) of Presidential Decree 902-A, as amended, which reads: The aforesaid guidelines were issued pursuant to the Commission's authority

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

XXX XX XXX

i) To impose fines and/or penalties for violation of this Decree or any other laws being implemented by the Commission. the pertinent rules and regulations, its orders, decisions and/or rulings;

XXX XXX XXX

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

XXX XXX XXX

In the matter of P.S.J. Carlos Development Corporatiort, the defunct Prosecution and Enforcement Department of the Commission ordered the revocation of a corporation's certificate of registration due to its failure to comply with the aforesaid guidelines within the specified period despite repeated notice and several extensions. The said corporation's failure to transfer titles of ownership in favor of or under its name resulted to the insufficiency of its initial paid-up capital as required under Section 13 of the Corporation Code of the Philippines which reads:

percent (25%) of the authorized capital stock as stated in the paid for the purposes of incorporation. -- At least twenty-five "Sec. 13. Amount of capital stock to be subscribed and

articles of incorporation must be subscribed at the time of

2 pED Case No. 95-1915, January 13, 1997.

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incorporation, and at least twenty-five (25%) per cent of the total payable on a date or dates fixed in the contract of subscription subscription must be paid upon subscription, the balance to be

five Thousand (P5,000.00) pesos. (n) upon call for payment by the board of directors: Provided, however, That in no case shall the paid-up capital be less than without need of call, or in the absence of a fixed date or dates.

In the present case, the same situation prevails considering that without the aforesaid two (2) parcels of land covered by TCT Nos. T-103993 and T-105015 which represent the payment for the subscription of Vicsev's shares of stock, the total amount of Vicsev's subscribed shares will only be One Hundred Thousand Pesos (Php 100,000.00) or far less than the twenty-five percent (25%) of the Ten Million Five Hundred Thousand Pesos (Php 10,500,000.00) reguired to be subscribed by Iw.

First, Vicsev cannot claim denial of due process in the revocation of its certificate of incorporation considering that it was given ample time and notice tol comply with the requirements under the aforesaid guidelines. Records show that from 11 March 2004, the date the aforesaid requirements are originally due, Vicsev enjoyed a grace period of over a year and a half before a conference was held on 19

requirements as well as the consequences thereof. Moreover, from the date of the October 2005 wherein CRMD notified Vicsev of its non-compliance with the

said conference until the issuance of the assailed Order on 23 March 2006, Vicsev enjoyed another five-month extension. Truly, Vicsev was accorded the due noticel and hearing referred to in Section 6 of Presidential Decree 902-A, as amended.

should have consistently moved for extension of time to comply with the aforesaid requirements as provided under Section 1(a) of the Guidelines. Records show that dated 07 February 2004 requested an extension of sixty (60) days from 11 March Vicsev sent only two (2) letters to CRMD requesting for extension. The first letter 2004. The second letter dated 21 April 2004 requested another extension of sixty (60) days from 11 May 2004 or until 10 July 2004. However, after its second letter. Second, granting that its various excuses for non-submission are true, Vicsev

Vicsev chose not to file any additional request for extension despite the fact that it had not yet complied with the requirements. Thus, it can be inferred that Vicsev had already assumed the possible consequences of its non-compliance within the authorized period.

said conference cannot be considered as a request for extension as they were neither substantiated nor put into writing. during the 19 October 2005 conference. The flimsy explanations it gave during the Furthermore, Vicsev cannot argue that it made another request for extension

justifiable reasons". The Commission is under no obligation to accept at face value The aforesaid guidelines are fairly clear that the period is extendible only "for

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supported its request with competent evidence rather than simply making bare the alleged reasons for the delay. It is axiomatic that the party that makes an affirmative allegation bears the burden of proving it.3 Thus, Vicsev should have

aliegations.

the burden of not only proving the truth of its allegations but of establishing how exactly said reasons prevented it from submitting its proof of transfer for over three Moreover, by invoking several reasons for its non-submission, Vicsev assumed

(3) years from the date of its incorporation.

Conspicuously, Vicsev failed to discharge this burden, both during the 2005 conference and in its pleadings.

The Order of Revocation dated 23 March 2006, revoking the Certificate of WHEREFORE, premises considered, the instant appeal is hereby DENIED

Incorporation of Vicsev Realty and Development Corporation, is hereby AFFIRMED without prejudice to its filing of a new application to incorporate. Let the Company for its appropriate action. Registration and Monitoring Department be furnished with a copy of this Decision

SO ORDERED.

Mandaluyong City, 11 February 2010.

FE B. BARIN W $.b Chairperson

MA. JUANITA E.CUETO Commissioner RAUL J. PALABRICA Commissioner

MANUEL HUBERTO B. GAITE EladiO JALA

Commissioner Commifsioner

3 Uy v. Phela Trading Corp., G.R. No. 152900, February 11, 2005, citing Manzano vs. Perez, G.R. No. 112485, Aug. 9, 2001 and United Airlines vs. Court of Appeals, G.R. No. 124110, April 20, 2001.