SEC Enbanc Case No. 10-11-248 Globalinks Securities and Stocks, Inc. vs. Market Integrity Board of the Philippine Stock Exchange, Inc.

Securities and Exchange Commission Republic of the Philippines Department of Finance

SEC Bldg., EDSA Greenhills, Manda!uyong City

AND STOCKS, INC. GLOBALINKS SECURITIES Appellant.

versus SEC En Banc Case No. 10-11-248

MARKET INTEGRITY BOARD OF THE PHILIPPINE STOCK EXCHAngE, Inc. Appellee.

DECISION

C'Appellant," for brevity), assailing the Letter-Order dated 10 June 2009 issued by the appellee, Market Integrity Board of the Philippine Stock Exchange or the PSE (`Appellee," for brevity) denying Appellant's letter dated 09 June 2009 requesting for reconsideration of the penalty imposed by the Market Regulation Division of the PSE (`PSE-MRD," for brevity) for the late filing of the company's Annual Audited Financial Statements (`AAFS," for brevity) for the fiscal year 31 December 2008, in violation of SEC Memorandum Circular No. 7, series of 2008 ("MC No. 7, s.2008," for brevity) and SRC Rule 52.1-5 of the For resolution is the Appeal filed by appellant, Globalinks Securities and Stocks Inc.

Amended Implementing Rules and Regulations (`Amended IRR," for brevity) of the Securities and Regulation Code ("SRC," for brevity).

The relevant facts as culled from the records, are as follows:

pertinent portions of which state: On 21 May 2009, the PSE-MRD issued a show cause order to Appellant, the

accordance with the schedule mandated in said circular. Market Regulation Division requires each Trading Participant whose fiscal year ends on 31 December 2008 to submit its audited financial reports in "Pursuant to SEC Memorandum Circular No. 7, series of 2008, the

Financial Statements (AAFS) for the year ended 31 December 2008 on 14 Our records show that you submitted your Annual Audited

1 R.A. No. 8799 (2000).

Page 2 of 6 Globalinks Securities Inc. vs. Market Integrity Board of the Philippine Stock Exchange SEC Admin Case No. 10-1

May 2009. Based on the last digit of your SEC Registration No., your AAFS was due on 8 May 2009.

such failure under the PSE Sanction Guidelines, as follows: In this connection, we direct your attention to the consequence of

TYPE OF VIOLATION SANCTION

year) Delayed submission or non- reports (deadline is 110 days SRCRule52.1-5(Annual submission of audited financial after the ciose of the fiscal Audited Financial Reports of Broker Dealers) P50,000 basic penalty plus P1000 per each day of delay

your receipt of this letter why you failed to submit the AAFS on time." Accordingly, kindly explain in writing within five (5) days from

from PSE-MRD to Appellant's external auditor, R.S. Bernardo and Associates, through PSE-MRD with the following explanation, to wit: Romeo A. De Jesus, Jr. (`De Jesus," for brevity). On 29 May 2009, De Jesus wrote to the Ramona Ang (`Ang," for brevity), the President of Appellant, forwarded the letter

"Realizing how scheduling timely submission of 2008 AAFS for our many was also made to submit the AAFS first to PSE on April 20, 2009, but these were not accepted due to absence of receipt stamp from SEc. client (sic) has always paused (sic) a tough challenge, we actually tried to file the 2008 AAFS to Securities & Exchange Commission as early as April 20, 2009 but was advised to follow the new schedule. Likewise, attempt

The AAFS was eventually filed and stamped received by BIR and SEC on April 15 and May 7,'2009 respectively, in preparation for timely submission to your good office on or before May 8, 2009 pursuant to the SEC Memorandum Circular No. 7. However, due to internal miscommunications, copies that are supposed to go to PSE were not delivered on May 8, 2009 as instructed.

Please be assured that there is no willful intention to ignore the deadline nor cause our client to violate the reportorial requirement.xxx" (Emphasis ours)

2009, reiterating that there was no willful intent to neglect the reportorial requirements.3 Appellant attached the letter-explanation of De Jesus to its letter dated 29 May

2 Records, p. 21. 3 Id., p. 20.

Page 3 of 6 SEC Admin Case No. 10 Globalinks Securities Inc. vs. Market Integrity Board of the Philippine Stock Exchange

before the Appellee. On 09 June 2009, Appellant sought reconsideration of the ruling of the PSE-MRD

On 13 July 2009, Appeilant received a letter dated 10 July 2009 from the Appellee denying its request for reconsideration to waive the penalties imposed by the PSE-MRD.

(`SEC-MRD", for brevity), Appellant requested that the penalty imposed be waived as it is the company's first offense for late filing. (`Director Aquino," for brevity) of the Market Regulation Division of the Commission In a letter-appeal dated 23 July 2009 addressed to Director Jose P. Aquinc

had been endorsed to the Commission En Bancfor appropriate action. In a letter dated 27 July 2009, Director Aquino informed Appellant that the same

file a verified Memorandum on Appeal and to pay the corresponding docket fee. On 30 September 2011, the Commission issued an Order directing the Appeliant to

fee. On 19 October 2011, Appellant filed its Memorandum of Appeal and paid the docket

Reply Memorandum. On 08 November 2011, the Commission issued an Order to the Appellee to file its

Reply-Memorandum dated 24 November 2011 with the Commission by registered mail and that it furnished the Appellee a copy thereof. The said Reply-Memorandum was received by the Commission on 02 December 2011. On 25 November 2011, the Appellee filed a Manifestation stating that it filed its

ARGUMENTS

arguments: (1) there is a sufficient ground to waive the penalties and (2) even assuming that there was delay in the submission, the circumstances warrant the relaxation of the rules pertaining to the imposition of the penalty which has caused prejudice to no one. In its Memorandum of Appeal, the Appellant advanced the following main

the 2008 AAFS on time.5 Likewise, Appellant posits that the Commission should take into which happened for the first time, resulted in the 2008 AAFS inadvertently not filed on the supposed day of submission to the PSE. In support of its contention, Appellant attached the Affidavit of Merit executed by De Jesus explaining the inadvertence in not submitting likewise points out that the delay was not due to its negligence or willful intent not to abide by the rules, and reiterates that there was an attempt to submit its 2008 AAFS even before the deadline, but internal miscommunications in the office of the External Auditor Appellant cites its track record for consistently filing its AAFS on time. Appellant

5 Id., p. 15. 4 Records, p. 19

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consideration the attending circumstances and the good faith on its part to comply with the rules, and that the spirit, not the letter of the law, should be applied.

the provisions of MC No. 7, s.2008 and SRC Rule 52.1-5; (2) the pieces of On the other hand, the Appellee contends that: (1) Appellant admits that it violated

evidence/defenses advanced by Appellant are self-serving in nature and there is no probative value to Appellant's allegations; (3) the obligation to submit the AAFS lies solely with the Appellant and not its External Auditor; and (4) there is no legal basis for a relaxed implementation of the law.

of the trading participants. 2009, the PSE-MRD released a Memorandum to all Trading Participants informing them of filing of AAFS. The Appellee even attached a copy of MC No. 7, s.2008 for the convenience SEC Memorandum Circular No. 7, series of 2008 pertaining to the new procedures for In support of its arguments, the Appellee points out that as early as 28 January

submission of its AAFS and not its External Auditor. Finally, Appellee contends that there is s.2008, it was required to submit its 2008 AAFS either on May 4,5,6,7 or 8, 2009, and that Appellant only submitted its 2008 AAFS on 14 May 2009, or six (6) days after the not present supporting evidence to the PSE-MRD and failed to establish the alleged deadline. In addition, Appellee contends that other than its bare allegations, Appellant did "internal miscommunication" and "absence of negligence or willful intent." Moreover, Appellee posits that under the law, it is the Appellant who is principally liable for the timely no justifying factual circumstances to warrant the relaxation of the rules in the Appellant's Appellee emphasizes that the Appellant admitted that pursuant to MC No. 7,

case.

ISSUE:

sanctions upon the Appellant for its failure to submit its 2008 AAFS on time. The sole issue for consideration is whether or not the Appellee erred in imposing

RULINGE

We affirm the ruling of the Appellee

The SRC provides:

Exchanges, Members, and Others. Exchange, broker or dealer, transfer agent,.clearing agency. securities association, and other self-regulatory organization, and every other person required to register under this Code, shall make, keep and preserve for such periods, records, furnish such copies thereof. and make such reports, as the Commission by its rules and regulations may prescribe. "SECTION 52. Accounts and Records, Reports, Examination of 52.1. Every registered

Page 5 of 6 SEC Admin Case No. 10-1 Globalinks Securities Inc. vs. Market Integrity Board of the Philippine Stock Exchange

Such accounts, correspondence, memoranda, papers, books, and other records shall be subject at any time to such reasonable

appropriate in the public interest or for the protection of periodic, special or other examinations by representatives of the Commission as the Commission may deem necessary or

investors.xxx"(Emphasis supplied)

The Amended IRR of the SRC states:

"SRC Rule 52.1-5(A)

A. Every Broker Dealer shall file annually with the Commission and any Exchange to which it is a member at the close of its

independent certified public accountant and a statement of fiscal year an audited financial report by a Commission-accredited

management responsibility of said Broker Dealer." (Emphasis supplied)

Pursuant to the rule making authority of the Commission, MC No. 7, s. 2008 was

orderly filing of the AAFS and avoid near pandemonium in the premises that compromise corresponding to the last digit of SEC registration numbers of corporations as the dates promuigated for corporations whose fiscal year ends on 31 December 2008 to ensure the the safety of the filers, personnel and government property, by allocating certain dates

within which they shall submit their respective AAFS.

It is worth noting that Appellant is cognizant of its delay in the filing of its AAFS with the PSE, which it admits in its various communications with the Appellee and in the instant Memorandum of Appeal.3

Appellant nonetheless, shifts the blame to its External Auditor for the delay in the submission. However, it is clear under the aforecited Section 52 of the SRC and SRC Rule

reportorial requirements lies with the Appellant. 52.1-5(A) of the Amended IRR that the responsibility for the timely submission of

before the stated schedule. However, other than the self-serving affidavit executed by its Appellant likewise claims that it attempted to file its 2008 AAFS to the PSE way

evidence nor cite compelling reasons for it to be taken into consideration. External Auditor De Jesus, the Appellant was not able to establish this fact by substantial

In administrative proceedings, substantial evidence has been defined as:

substantial evidence, whether the evidence reasonably tends to "such evidence as will establish a substantial basis of fact from which the fact at issue can be reasonably inferred xxx The test is whether the administrative decision finds reasonable support in

6 See Records, pp. 17, 19, 20, and 33.

Page 6 of 6 SEC Admin Case No. 10-11-248. Globalinks Securities Inc. arket Integrity Board of the Philippine Sto change

is not clearly contrary to the overwhelming weight of the evidence."7 support the findings, or, it has been indicated whether the decision

substantial compliance with the law, rules and regulations implemented by the significant, compelling reason to consider its purported attempts to submit its AAFS as Commission. Other than bare allegations, the Appellant failed to convince that there is a

there are circumstances justifying a less stringent application of the rules, there are no exceptional circumstances that would be applicable in the present case. ignorance nor inadvertence as excuse from compliance therewith. Appeilant is bound by the provisions of the law and the rules. It cannot claim Even assuming that

merit. The Letter Order dated 10 June 2009 of the Market Integrity Board of the Philippine Stock Exchange is hereby AFFIRMED. WHEREFORE, premises considered, the instant Appeal is DENIED for lack of

Monitoring Department and the Philippine Stock Exchange for its information and appropriate action. Let a copy of this Decision be furnished to the Company Registration and

SO ORDERED.

Mandaluyong City, 12 January 2012.

TERESITA J. HERBOSA

Chairperson

9.0w. MA. JUANItA e: CUeTD RAUL J. PALABRICA

Commissionei Commissioner

MANUEL Commissioner B. GAITE ELaDt Commi$sioner JALA

7 2 Am. Jur. 2d pp. 573-579, Sec. 688,