SEC En Banc Case No. 10-10-221 Antonio Y. Pinzon Respondent-Appelant - versus - Manuel S.C. Asensio III, Petioner-Appellee

SEC Building,EDSA,GreenhillsMandaluyong City Securities and Exchange Commission Republic of the Philippines Department of Finance

ANTONIO Y. PINZON, -versus- Respondent-Appellant For: Calling of Annual Stockholders SEC En Banc Case No. 10-10-221 (SEC Case No. 12-07-201) Meeting

MANUEL S.C. ASENSIO III, Petitioner-Appellee.

X

DECISION

dated 29 October 2010, filed by Antonio Y. Pinzon ("Appellant' for brevity) assailing the 06 October 2010 Order ("Assailed Order" for brevity) of the Office of the General Counsel ("OGC" for brevity). The dispositive portion of the Assailed Order reads: For consideration of the Commission En Banc is the Memorandum on Appeal,

Petitioner is DIRECTED to call a meeting of Asensio-Pinzon Aggregates Corporation and preside thereat as mandated by Section 50 of the Corporation Code. "WHEREFORE, premises considered, the petition is hereby GRANTED.

registered with the Commission on July 9, 1990 to determine the stockholders of record entitled to vote. Parties are likewise ORDERED to use the Stock and Transfer Book

meeting within thirty (30) days from date of the meeting. Finally, petitioner is hereby ordered to submit proof of the stockholders

Aggregates Corporation (APAC).1 Manuel S.C.Asensio III ("Appellee"for brevity),on the other hand, is the Chairman of the Board of APAC.2 Appellant is the President and Chief Executive Officer of Asensio-Pinzon

Meeting, dated 03 December 2007, alleging that APAC has been besieged with devices and misrepresentation, including controversies in the election or appointment of directors and officers. He, further alleged that he has made honest attempts at and schemes and acts of some directors, stockholders and officers amounting to fraud On 05 December 2007, Appellee filed a Petition for Calling of Stockholders

2 Ibid.Records, p. 24. 1 Memorandum on Appeal dated 29 October 2010. Records, p. 25.

Antonio Y. Pinzon vs. Manuel S.C. Asensio III SEC En Banc Case No. 10-10-221 Page 2 of 8

convening a board meeting and stockholders' meeting based on the by-laws of APAC, but these have been thwarted by the directors, officers and stockholders of APAC to the detriment of the other stockholders, the corporation, and the public in general.3

misrepresentation against APAC. Moreover, Appellant alleged that a stockholders meeting was held in January 2005 at EDSA Shangri-La Hotel and the stockholders were followed. Furthermore, Appellant alleged that the parties agreed to settle the issue before the appropriate tribunal prior to the calling of another stockholders' meeting.4 unable to elect the members of the board and officers due to the issue of the existence of twostock and transfer books and as to which stock and transfer book (STB) should be Appellant, alleged that it is the Appeilee who has been perpetrating the fraud and In its Answer dated 19 March 2008, the Board of Directors of APAC, through the

Petition and directing the parties to use the Stock and Transfer Book registered with the Commission on July 9, 1990 to determine the stockholders of record entitled to vote. On 06 October 2010, the 0GC issued the Assailed Order granting Appellee's

Appeal based on the following grounds. First, despite Appellee's coming to this to regulate and supervise private corporations as provided under Section 5.1 (c),7 (d),8 Commission with unclean hands by securing another STB, the Commission still rewarded him by granting his petition. Second, the unjustified refusal of the the questioned order is contrary to the agreement of the parties during the stockholders meeting in January 2005. Commission to nullify the second STB in the possession of Appellee, despite a clear finding of violation in its application and issuance, smacks of gross abdication of its duty f),9(h),10 and (n)11 of Republic Act No.8799 (Securities Regulation Code).And third, On 29 October 2010, Appellant filed a Notice of Appeal5 and Memorandum on

November 2010, arguing as follows. First, the appeal should be dismissed outright Commission has the power to compel the calling of stockholders meeting under Section considering that Appellant is not authorized by the Board of APAC. Second, the On 30 November 2010, Appellee filed his Comment/0pposition,12 dated 22

or which are necessary or incidental to the carrying out of, the express powers granted the Commission to 4 Ibid. Records, pp. 6-7. 5 Records, pp. 26- 28. 6 Records, pp. 9-25. implementation of its powers and function under its Code; 12 Records, pp. 33 to 37. 306 October 2010 Order of the OGC.Records,p.7 7(c) Approve, reject, suspend, revoke or require amendments to registration statements, and registration (d) Regulate, investigate or supervise the activities of persons to ensure compliance; 9(f) Impose sanctions for the violation of laws and rules, regulations and orders, and issued pursuant 1o(h)Enlist the aid and support of and/or deputized any and all enforcement agencies of the Government. civil or military as well as any private institution, corporation, firm, association or person in the 11(n) Exercise such other powers as may be provided by law as well as those which may be implied from, achieve the objectives and purposes of these laws. thereto and licensing applications;

Antonio Y.Pinzon vs.Manuel S.C. Asensio II SEC En Banc Case No. 10-10-221 Page 3 of 8

represents the correct shareholding of the corporation requires full blown proceedings, when it declared that although the STB in the possession of the Appellant's group should be followed, the same does not result in the nullification of the STB of the 5013 of the Corporation Code in relation to Section 5.1(k)14 of the Securities Regulation Code especially under the facts of the present case where there was no stockholder's meeting conducted since 2004. And third, the Commission only exercises prudence Appellee's Group because the determination as to whether or not the STB of the latter which should be the subject of a separate case.

legal personality to file the present Appeal; (2) Whether or not the OGC committed a reversible error when it granted Appellee's Petition for Calling of Meeting; and, (3) Whether or not the OGC committed a reversible error when it refused to nullify Appellee's STB. The issues to be resolved are as follows: (1) Whether or not Appellant has the

board of directors of APAC, Appellant cannot file the instant appeal. This argument is the corporation that requires board concurrence, hence, absent any authority from the not persuasive. Anent the first issue, Appellee argues that the filing of an appeal is a major act of

Manager, Personnel Officer, and an Employment Specialist in a labor case. 15 Here, it is he can sign the verification and certification necessary for the filing of the instant appeal undisputed that Appellant is the President and the Chief Executive Officer of APAC; thus, without proof that it is authorized by the Board of Directors of APAC. employees of a corporation that could sign the verification and certification without need of a board resolution, such as but not limited to: the Chairperson of the Board of Directors, the President of a corporation, the General Manager or Acting General The Supreme Court, in a number of cases, has recognized certain officials or

the same has already been ratified by acquiescence. In Yasuma vs. Heirs of De Villa,16 ratified expressly or impliedly (e.g. acquiescence), to wit: the Supreme Court emphasized that an unauthorized act of its corporate officer can be Granting but not conceding that Appellant is not authorized to file this appeal,

corporate officer. Ratification means that the principal voluntarily adopts, confirms and gives sanction to some unauthorized act of its agent on its "However, the corporation may ratify the unauthorized act of its

members thereof under its supervision; 16G.R.No.150350, August 22,2006. 13 Section 50. xxx Whenever, for any cause, there is no person authorized to call a meeting, the Securities therefor, may issue an order to the petitioning stockholder or member directing him to call a meeting of the corporation by giving proper notice required by this Code or by the by-laws. The petitioning stockholder or member shall preside thereat until at least a majority of the stockholders or members 15 Spouses Eugene L. Lim and Constancia Lim vs. Court of Appeals, G.R. No.192615, January 30,2013, citing Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue, G.R. No. 151413, February 13, 2008. Emphasis and underscoring supplied. and Exchange Commission, upon petition of a stockholder or member on a showing of good cause present have chosen one of their number as presiding officer. i4 (k) Compel the officers of any registered corporation or association to call meetings of stockholders or

Antonio Y. Pinzon vs. Manuel S.C. Asensio II SEC En Banc Case No.10-10-221 Page 4 of 8 behalf. It is this voluntary choice, knowingly made, which amounts to a authorized act of the party so making the ratification. The substance of the doctrine is confirmation after conduct, amounting to a substitute for a acquiescence, acts showing approval or adoption of the act, or acceptance and retention of benefits flowing therefrom."17 ratification of what was theretofore unauthorized and becomes the Implied ratification may take various forms like silence or prior authority. Ratification can be made either expressly or impliedly

APAC; thus, their assent to this appeal can be reasonably inferred from their silence. In this case, no objection was interposed by other members of the board of

Appellant to represent APAC or its board. A perusal of the records would reveal that it was thru Appellant that the Board of Directors filed its verified Answeri8 to Appellee's Petition for Calling of Stockholders Meeting without any board resolution attached to the said Answer. It is now too late for Appellee to question Appellant's authority to represent APAC or its board. It is settled that an Appeal is a continuation of the original suit.19 Appellant, therefore, has the legal personality to file the instant Appeal. Furthermore, Appellee is already estopped from questioning the authority of

to hold a stockholders' meeting. Second, no good cause was shown by Appellee for the 2005, the Assailed Order, therefore, is contrary to the said agreement. The foregoing Petition for the following reasons. First, Appellee filed his Petition with unclean hands as Appellee's act of securing another STB was the cause of the continued failure of APAC resolution on the issue of the two STBs during the stockholders' meeting of APAC in arguments are untenable. calling of meeting considering that he failed to adduce evidence to prove that he exhausted available remedies under considering the parties' agreemer As regards the second issue, Appellant claims that the OGC erred in granting the t not to call any stockholders meeting pending the the by-laws of the corporation. And third,

the Revised Securities Act, as well as implementing rules and directives of the SEC, such applications for, or may suspend or revoke (after due notice and hearing), certificates of registration of corporations, partnerships and associations (excluding cooperatives, homeowners associations, and labor unions); compel legal and regulatory as may be warranted.20 compliances; conduct inspections; and impose fines or other penalties for violations of Under its regulatory responsibilities, the Commission may pass upon

Section 50 of the Corporation Code21 provides:

21 Batas Pambansa Blg.68 (1980). 18 Answer Ex Abundante Ad Cautelam, dated 19 March 2008. 20 Securities and Exchange Commission vs. Universal Rightfield Property Holdings, Inc., G.R. No. 181381, July 20, 2015, citing, Gamboa vs. Finance Secretary, G.R.No. 176579, June 28, 2011. Emphasis and 17 Emphasis and underscoring supplied. 19 Madrigal Transport, Inc. vs. Lapanday Holdings Corporation, et. al., G.R. No. 156067, August 11, 2004 underscoring supplied

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the meeting, unless a different period is required by the by-laws. x x x"22 "Regular meetings of stockholders or members SHALL be held annually on a date fixed in the by-laws, or if not so fixed, on any date in April of every year as determined by the board of directors or trustees: Provided, That written notice of regular meetings shall be sent to all stockholders or members of record at least two (2) weeks prior to

stockholders or members have the opportunity to know the condition of the company, meeting for the election of directors, the same should be held on the regular appointed time, unless the meeting cannot be held. 23 during this meeting that the board of directors are elected, and during which the its plans and programs. When the by-laws provide for the time of holding of an annual It is clear that the holding of a regular/annual meeting is mandatory as it is

stockholder's meeting was held since 2006,24 a stockholders' meeting is, indeed, in whether or not there is an agreement between the parties during the stockholder's meeting of APAC in 2005 is immaterial for what is involved in Petitions for Calling of Meeting is the exercise of the Commission's power to compel legal and regulatory compliances from corporations. Further, by Appellant's own admission that no order Certainly, whether or not Appellee filed his Petition with unclean hands, or

STB did not conform to the records of the Commission. He argues that such unjustifiable refusal is a gross abdication of Commission to regulate and supervise private reversible error when it refused to nuliify Appellee's STB despite the finding that said corporations under Section 5.1(c), (d), (f), (h), and (n) of the Securities Regulation Code.25 Further, he claims that the instruction to file a separate petition to nullify Appellee's STB is not only contrary to the rules but also duplicitous and encourages delay and expensive litigation. As to the third issue, Appellant contends that the Commission committed a

We agree with Appellant.

falls within the regulatory jurisdiction of the Commission as held by the Supreme Court in Provident International Resources Corporation vs. Joaquin T. Venus.26 Thus: There is no question that the determination of whether a STB is valid necessarily

regulatory power to revoke the corporate franchise -- from which a corporation owes its legal existence -- the SEC must likewise have the "Considering that the SEC, after due notice and hearing, has the

23 De Casa, Handbook on Private Corporations (Domestic & Foreign) p. 426-427 (2009) citing SEC 25 Supra, Notes 7 to 11. 26 G.R No. 167041, June 17, 2008. 22 Emphasis and underscoring supplied. 24 Records, p. 20. Opinion dated 8 March 1995 addressed to Mr. Ratan A. Vaswani.

Antonio Y. Pinzon vs. Manuel S.C. Asensio II SEC En Banc Case No. 10-10-221 Page 6 of 8 lesser power of merely recalling_and canceling a STB that was erroneously registered.

as early as September 1979. As the administrative agency responsible of the STB registration procedures, and in possession of the can be resolved without going into the intra-corporate controversies SEc has the primary competence and means to determine and verify whether the subject 1979 STB presented by the incumbent assistant corporate secretary was indeed authentic, and duly registered by the SEC officers relating to the registration of STBs. The evaluation of whether a STB was authorized by the SEC primarily requires an examination of the STB itself and the SEC files. This function necessarily belongs to the SEC as part of its regulatory jurisdiction. brought up by respondents. for the registration and monitoring of STBs, it is the body cognizant pertinent files, records and specimen signatures of authorized Contrary to the allegations of respondents, the issues involved in this case Going to the particular facts of the instant case, we find that the

is only one set of STB for each corporation. The determination of whether or not the 1979-registered STB is valid and of whether to cancel and revoke the Auguct 6, 2002 certification and the registration of the 2002 STB on the ground that there already is an existing STB is impliedly and necessarily within the regulatory jurisdiction of the SEC."27 As the regulatory bodv it is the SECs duty to ensure that there

to the records of the Commission. However, Appellee's STB was not nullified and, Company Registration and Monitoring Department should the latter wish to nullify the Same.28 of Appellant considering the fact that the STB in Appellee's possession do not conform instead, Appellant was instructed to file a separate petition for nullification with the In the Assailed Order, the parties were directed to use the STB in the possession

be liberally construed to assist the parties in obtaining a just, prompt, expeditious, and proceedings, an opportunity to explain one's side.30 Further, the essence of due process is simply to be heard, or as applied to administrative inexpensive resolution, settlement, and/or disposition of all actions brought before it.29 It cannot be overemphasized that the rules of procedure of the Commission must

order to settle the issue on STBs. Memoranda32 were also issued to the Company As borne out by the records, nine preliminary conferences31 were conducted in

30 F/0 Augustus Z.Ledesma vs. Court of Appeals, et. al., G.R.No. 166780,December 27,2007. 27 Emphasis and underscoring supplied. 29 Section 1-3, Rule I, The 2006 Rules of Procedure of the Securities and Exchange Commission. 2009, 24 February 2009, 24 March 2009, 15 April 2009, and July 28, 2010. 28 Supra, Note 3. Records, p. 2. 31 Held on 06 October 2008,04 November 2008,26 November 2008,02 December 2008,14 January

Antonio Y. Pinzon vs. Manuel S.C. Asensio II SEC En Banc Case No.10-10-221 Page 7 of 8

assistance of the latter in determining which of the two STBs is valid. In fact, an interview was conducted with Ms. Annette Tamayo, Records Officer III of Corporate determine the validity of a STB using primary and secondary sources.34 Moreover, And based on the foregoing, the OGC found that Appellant's STB was registered within the prescribed period, and is supported by documentary evidence, whereas Appellee's STB is marred by irregularities.35 Registration and Monitoring Department (CRMD) of the Commission requesting the Filing and Records Division (CFRD) of the CRMD33 regarding the process on how to position papers were filed by the parties concerning their respective stand on the issue.

which of the two STBs is valid. To require Appellant to file another petition to nullify Appellee's STB will only lead to redundancy and will only waste the precious time and resources not only of the parties but of the Commission's as well. Clearly, an extensive proceeding had already been undertaken to determine

or under previous registrations." "Ethel B. Pinzon" was handwritten as the Corporate Secretary, but she handwriting is illegible. (Assailed Order, Records, pp. 2-3) Stock and Transfer Book/Membership Book Registration Form, a copy of which we have on file. It clearly Group was done only on November 25,2003.It also states:"This is to certify that the STB/MB being this company is not in possession of any other copy of the volume being registered under this application was not the signatory. Rather, the word "for" was written and it was signed by somebody else whose Registration and Monitoring Department and Memorandum dated 12 July 2010 addressed to Assistant Director Gerardo F. Del Rosario. 33 Supra, Note 3, Footnote No. 14. Records, p. 4. 34 Prior to 1996, the primary source is the registration of the stock and transfer book evidenced by the stamp at the back of the Certificate of Registration. Another primary source is the STB Registration Form which the CFRD-CRMD started using sometime in 1996. The secondary source is the monitoring sheet. 9-90;Volume 1, Serial No. 001976. These entries, including the signature of initial of Ms. Connie Ranches, a retired employee assigned at the defunct Supervision and Monitoring Department, are reflected on the first page of the certified true copy of the STB submitted by the Pinzon Group. The fact of the registration of the STB of the Pinzon Group is corroborated by the Monitoring Sheet dated November 22,2003,a secondary source. Under the entry, Stock and Transfer Book, 7-9-90 OT (On Time) appears. The petitioner attached a copy of the 1st page of the STB in their possession which states: "This STB Vol. I has been inspected and approved for the use of Asensio-Pinzon Aggregates Corp. in accordance with the Rules of the Commission," dated November 25, 2003. What the petitioner failed to attach is a copy of the notes that "The STB/MB must be registered within 30 days from receipt of certificate of registration."Yet, although APAC's approval of primary license was on 6 july 1990, the registration of the STB of the Asensio registered is (please check appropriate box0" and "VOLUME No. 1"was checked. It continues, "and that 32 Memorandum dated 18 November 2008 addressed to Director Benito A. Cataran of the Company above. The stamp at the back of the Certificate of Registration contains the following information: Date 7- (Assailed Order,Records,p. 4 3s Records show that the STB of the Pinzon Group was registered within the prescribed period stated XXX

Antonio Y. Pinzon vs.Manuel S.C. Asensio II SEC En Banc Case No. 10-10-221 Page 8 of 8

GRANTED. The Stock and Transfer Book in the possession of Appellee Manuel S.C Asensio III is hereby nullified. WHEREFORE, premises considered, the Memorandum on Appeal is PARTIALLY

from date of the meeting. Corporation and preside thereat as mandated by Section 50 of the Corporation Code. Appellee is further ordered to submit proof of the stockholder's meeting within 30 days Appellee is directed to call a meeting of the Asensio-Pinzon Aggregates

Monitoring Department for proper notation and action. Let a copy of this Decision be furnished to the Company Registration and

SO ORDERED.

Pasay City, Philippines, 11 October 2016.

TERESITAJ.HERBOSA Chairperson

MANUEI Commissioner RTO B.GAITE ANTONIETA F.IBE AtMa Commissioner Raitwr

EPHYRO LUIS B.AMATONG * Commissioner V Commissioner AMESG.VITERBO

*On Leave