SEC Adm. Case No. 11-09-110 Mherrynoll College of Asia, Inc.

SEC Bldg. EDSA, Greenhills, Mar:daluyong City SECURITIES AND EXCHANGE COMMISSION Republic of the Philippines

IN THE MATTER OF

MHERRYNOLL COLLEGE OF ASIA INC. SEC Admin Case No. 11-09-110 For: Revocation of Corporate Registration

ENFORCEMENT AND PROSECUTION DEPARTMENT, Petitioner.

DECISION

Corporate Registration of Mherrynoll College of Asia, Inc. ('Mherrynoll" for brevity) dated 08 July 2008, filed by the Enforcement and Prosecution Department ('EPD1 for brevity) on the ground of filing a faisified Articles of Incorporation (`AOI'? for purposes of registration, in violation of Section 6(1)(i) of Presidential Decree No. 902) A, as amended. For consideration of the Commission En Banc is the Petition for Revocation of

FACTS OF THE CASE

December 2007 under SEC Registration No. CN200719630 with principal office at Quarry Road, Barangay Pantok, Binangonan, Rizal. Mherrynoll is a corporation duly' registered with the Commission on 20

by Pederson A. Villamayor, Rosalinda A. Villamayor, Marlon A. Villamayor and Jackson A. Villamayor against Mherrynoli and another corporation by the name of On 08 May 2008, a Petition for Revocation of Corporate Registration was filed

Mherrynoll Educationai Development and Technological Center, Inc.

C'Nikki"?, one of the incorporators of Mherrynoil, has no contractual capacity at the time of Mherrynoll's incorporation by reason of minority. In the said Petition,, petitioners alleged that Noel "Nikki" A. Hernandez

he was only seventeen (17) years of age when he signed the Articles of In a conference conducted by the EPD on .26 May 2008, Nikki admitted that

Incorporation of Mherrynoli. In his defense, he maintained that he signed the AOI

1 Mherrynoll's Amended Articles of Incorporation dated 22 February 2008.

in the Matter Of Mherrynoll College of Asia, inc. SEC Admin. Case No. 11-09-110

the said affidavit, it was stated that "Nikki "was barely seventeen (17) years bld, and upon the advice of a certain Atty. Efren Bautista, Mherrynoll's in house legal counsel. Also, Nikki presented during the same conference a copy of an Affidavit of Guardianship dated 24 October 2007 executed by Maria "Mherry" Hernandez. Under as such, is under guardianship and custody of his parents, Noel Hernandez and Maria "Mherry" Hernandez.

the Commission's Office of the Generai Counsel (OGC' a petition for the revocation of corporate registration of the said corporation. On 09 November 2009, the EPD, on the basis of its own findings, filed with

ISSUE

sufficient ground to revoke Mherrynoll'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.

qualifications of incorporators, to wit: Section 10 of the Corporation Code (`Code'2 provides for the number and

Any 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 residents of the Philippines, may form a private corporation for share of the capital stock of the corporation." (emphasis supplied) any lawful purpose or purposes. Each of the incorporators of a stock corporation must own or be a subscriber to at least one (1) "SEC. 10. Number and Qualifications of Incorporators.

established. Based on Nikki's certificate of live birth,3 the authenticity of which was From the records, it appears that Nikki's minority was conclusively

particularly the fifth article, the name Noel "Nikki" Hernandez was isted as one of on 22 October 2007 and its Certificate of Incorporation4 was approved on .20 December 2007. In its Articles of Incorporation5 filed with the Commission, not denied by Mherrynoll, he was born oniy on 02 July 1990. Meanwhile, Maria "Mherry" Hernandez and Noe! Hernandez applied for the registration of Mherrynoll

the incorporators. Thus, at the time of Mherrynoll's application for registration and at the time its registration was appf'oved, Nikki, as an incorporator, wasonly seventeen (17) years of age, clearly in violation of Section 10 of the Code, which requires that all incorporators should be of legal age.

The act of knowingly employing an incapacitated person as incorporator constitutes fraud, which may be a ground for the revocation of a corporation's

2 Batas Pambansa Blg. 68 (1980). 3 Annex 'A-I' of respondent's Answer. 4 Under SEC Registration No. CN200719630. 5 Signed by the incorporators on 13 December 2007.

In the Matter Of Mherrynoll Colieae of Asia. !nc SEC Admin. Case No. I1-09-I 10

certificate of registration.

power of the Commission to revoke a corporation's certificate of registration, to wit: Section 6(I)(i) of Presidential Decree No. 902-A, as amended, provides for the

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

XX X

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

registration; 1. Fraud in procuring its certificate of

x x x"(emphasis supplied)

approval of its registration, thus, no fraud is committed because respondent acted in President Maria "Mherry" Hernandez, contends that Nikki was made an incorporator because of their honest belief that despite his minority, he is qualified to be an incorporator if the parents execute an affidavit of guardianship. Respondent good faith. Mherrynoll further contends that it has made known Nikki's minority before the In its answer to the petition, respondent Mherrynoli, represented by its

records of the respondent corporation. flimsy. For one, the records wili show that the affidavit of guardianship was not was not presented to the Commission before the approval of its certificate of Commission's . Company Registration - and Monitoring Department C`CRMD' confirmed that the said affidavit of guardianship was not attached to the official presented to the Commission at the time of its appiication for registration. It must be emphasized that respondent Mherrynoll applied for registration on 22 October 2007 while the affidavit of guardianship was executed only on 24 October 2007] Aiso, contrary to respondent Mherrynoll's assertion, the said affidavit of guardianship registration on 20 December 2007. A memorandum addressed to the EPD from the However, we find respondent Mherrynoll's contention as rather lame and

respondent's application for registration on the basis of such affidavit for it runs counter to the requirement of Section 10 of the Code. application for registration, the Commission will still refuse to accept or approve Assuming arguendo that such affidavit of guardianship was attached in the

Incorporators must have the capacity to contract, hence, it necessarily follows

Dated 08 October 2009 attached as Annex "A" of the Reply.

In the Matter Of Mherrynoll College of Asia, Jnc. SEC Admin. Case No. 1 1-09- i 10

in forming a corporation for he is not capable of making a binding contract.7 In Philippine jurisdiction, minority restricts the capacity to act.8 Similarly, under Article though there may have been no damage to the contracting parties..Corollary thereto, the Corporation Code requires the incorporators to be of legal age. that unless sanctioned by statute, a minor cannot become one of the incorporators contract and any contract entered into by them are voidable or annullable even 1380 of the same Civil Code of the Philippines, minors cannot give consent to a

Mherrynoll as part of its registration. requirements indicating that Nikki is of legal age, is regarded as spurious and fraudulent. Had it been known to the Commission that such AOI was fraudulent, the CRMD would riot have approved Mherrynoll's application for registration. commit fraud. The execution of the subject affidavit of guardianship appears to be dubious and may be deemed as merely an afterthought for the purpose of concealing the fraud, thereby giving the patently illegal act a semblance of legality. Consequently, the sworn articies of At the outset, it may be deduced that there was an apparent intention to incorporation submitted byrespondent

registration of Mherrynoll is warranted. facilitating the approval of respondent's application for registration, there was a clear violation of Section 6(I)(i) of P.D. 902-A. Thus, the revocation of the certificate of concealing the minority of one of its incorporators: constitutes fraud thereby From the foregoing, and after having established that respondent's act of

corporate registration of Mherrynoll College of Asia, Inc. is hereby REVOKED. WHEREFORE, premises considered, the Petition is hereby GRANTED. The

Department for its appropriate action, as well as to the Economic Research and the general public. Information Department and the Commission's extension offices for dissemination to Let a copy of this Decision be furnished to the Company Monitoring

SO ORDERED.

Mandaluyong City, 10 June 2010.

TE B. BARIN Chairperson 5v.e

7 2 Fletcher Cyc. Corp. 1983 Revised Volume, Sec. 83. s. Article 38 of the Civil Code of the Philippines. 9 SEC Opinion dated 10 August 1987 addressed to Bengzon Zarraga Narciso Cudala Pecson & Bengson.

In the Matter Of Mherrynoll College of Asia: Inc. SEC Admin. Case No. I 1-09-i 10

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

MAnuEL HUBertO B. GAItE Commissioner ELADIO MY JALA Commistioner

*on leave of absence

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