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Corporation Law Cases PDF
Corporation Law Cases PDF
PICOP elevated the matter to the SEC En Banc.[9] It asked for the reduction of the filing fee from P12 Million to P210.00. The
present SEC Revised Schedule of Fees[10] (2001 Circular) does not provide varying filing fees for amended AOI depending on
the purpose of the amendment to be introduced.[11] Neither did the previous Schedule of Fees (1994 Circular) allow SEC to
collect and receive the same fees for amendment of AOI as an original filing.[12]
Under the latter Circular, the examining and filing fee for amended AOI of both stock and non-stock corporations is only
P200.00.[13]
The SEC En Banc, through Commissioner Jesus E.G. Martinez, denied PICOPs request.[14] He justified the Commissions
decision in the following tenor:
This Commission maintains the position that there is no legal basis to exempt PICOP Resources, Inc. from paying the filing fee
as assessed by the CRMD.
The assessed fee is based on the pertinent provisions of R.A. 3531. Although SEC memorandum Circular No. 2, Series of 1994
and the Schedule of Revised Fees approved on 23 July 2001 do not provide for a filing fee for extensions of term, these do not
limit the Securities and Exchange Commission from imposing the prevailing fees.[15]
PICOP sought a reconsideration[17] of the En Banc ruling. It argued that RA No. 3531 has been repealed by the Corporation
Code of 1980 and Presidential Decree 902-A.[18] Section 139[19] of the Corporation Code authorizes the SEC to collect and
receive fees as authorized by law or by rules and regulation promulgated by the SEC.
Along this line, PICOP posited that SEC Memorandum Circular No. 1, Series of 1986 (1986 Circular) rules on the specific subject
matter of Filing Fees for Amended Articles of Incorporation Extending the Term of Corporate Existence. The prescribed filing
fee is 1/10 of 1% of the authorized capital stock, with the qualification that it should not be less than P200.00 or more than
P100,000.00. PICOP pointed out that no equivalent provision appears in any of the subsequent SEC circulars such as the 1994
and 2001 circulars. Hence, the 1986 Circular should prevail.[20]
The SEC En Banc denied once more PICOPs request to reconsider the earlier ruling and reverted to the P12 Million
assessment.[21] It maintained that the provision on the maximum imposable fee under the 1986 Circular has been amended
by the 1994 Circular which removed the maximum imposable fee.[22] Furthermore, the SEC En Banc explained that
contentions that its 2001 Circular was not published are erroneous. There was, in fact, due publication in The Manila Standard
on July 31, 2001. Accordingly, the 2001 Circular became effective on August 15, 2001. Thus, the public was properly apprised
of the changes in fees.[23]
On August 12, 2002, PICOP paid under protest the amount of P11,999,790.00. This was in addition to its original payment of
P210.00 to cover the SEC-prescribed filing fee.[24] Then PICOP again moved for reconsideration.[25] This was denied by SEC
Chairperson Lilia R. Bautista.[26]
Dissatisfied, PICOP appealed the matter to the Office of the President (OP).[27] It raised the following issues: (1) whether or
not the OP has jurisdiction to entertain the appeal; and (2) in the event that the OP has jurisdiction, how much is the filing fee
for the amendment of PICOPs AOI to extend the term of its corporate existence?
Issues:
Petitioner has resorted to the present recourse and ascribes to the CA the following errors:
THE HONORABLE COURT OF APPEALS ERRED IN ISSUING THE RESOLUTION DATED MAY 3, 2004 DENYING PETITIONERS
MOTION FOR EXTENSION DATED MAY 31, 2004 AND, CONSEQUENTLY, DISMISSING THE PETITION IN CA-G.R. SP NO. 83179.II
THE HONORABLE COURT OF APPEALS ERRED IN ISSUING THE RESOLUTION DATED JUNE 30, 2004 DENYING PETITIONERS
MOTION FOR RECONSIDERATION (OF THE MAY 3, 2004 RESOLUTION).
III
THE HONORABLE COURT OF APPEALS ERRED IN FINDING NO PRIMA FACIE ERROR COMMITTED BY THE OFFICE OF THE
PRESIDENT IN SETTING ASIDE PETITIONER SECS ORDER DATED AUGUST 15, 2002 (DENYING RESPONDENTS REQUEST FOR
RECONSIDERATION OF THE SEC ORDER ASSESSING IT P12,000,000.00 AS FILING FEE FOR THE AMENDMENT OF ITS ARTICLES OF
INCORPORATION EXTENDING ITS CORPORATE LIFE). (Underscoring supplied)[56]
The petition is DENIED for lack of merit. The SEC erroneously assumed that the appeal period is fifteen (15) days from the denial
of its second motion for reconsideration or March 19, 2004. It believed that it has until April 3, 2004 within which to file a
petition for review with the CA. It was mistaken.
We resolve the question in the affirmative. The 1986 Circular is the proper basis of the computation since it specifically
provided for filing fees in cases of extension of corporate term. A proviso of the same nature is wanting in the other circulars
relied on by the SEC at the time PICOP filed its request for extension.
The SEC violated the due process clause insofar as it denied the public prior notice of the regulations that were supposed to
govern them. The SEC can not wield the provisions of the 1990 Circular against PICOP and expect its outright compliance. The
circular was not yet effective during the time PICOP filed its request to extend its corporate existence in 2002. In fact, it was
only discovered in 2004, fifteen (15) days before the SEC filed its second motion for reconsideration.
the petition is DENIED for lack of merit.
Revised Securities Act Rule 11(a) requires the submission of reports necessary for full, fair and accurate disclosure to the
investing public, and not the registration of its shares. (Annex F, p. 23, Rollo).
On July 17, 1997, respondent Commission wrote petitioner, enjoining the latter to show cause why it should not be penalized
for its failure to submit a Proxy/Information Statement in connection with its annual meeting held on May 23, 1997, in violation
of respondent Commissions Full Material Disclosure Rule.
Failing to respond to the aforesaid communication, petitioner was given a 2nd Show Cause with Assessment by respondent
Commission on July 21, 1997. Petitioner was then assessed a fine of P50,000.00 plus P500.00 for every day that the report
[was] not filed, or a total of P91, 000.00 as of July 21, 1997. Petitioner was likewise advised by respondent Commission to
submit the required reports and settle the assessment, or submit the case to a formal hearing.
Petitioner sought a reconsideration thereof which was denied by respondent Commission per assailed Order dated April 14,
1998, the dispositive portion of which reads:There being no new matters raised in the motion for reconsideration to overcome
the denial of the Appeal by the Commission En Banc in its Order of November 5, 1997, and considering that the reasons
advanced are [a] mere rehash of its defenses duly addressed in the Appeal, the Motion for Reconsideration is hereby, DENIED.
Petitioner then elevated its case to the Court of Appeals which, as already stated, affirmed the questioned Orders.
Issues:
a. Whether or not petitioner is required to comply with the respondent SECs full disclosure rules.
Whether or not the SECs full disclosure rules [are] contrary to and effectively [amend] section 5(a)(3) of the Revised Securities
Act.
b. Whether or not Respondent Court of Appeals erred in affirming with modification the imposition of excessive fines in
violation of the Philippine Constitution.[8]
In the main, the Court will determine (1) the applicability of RSA Implementing Rules 11(a)-1, 34(a)-1 and 34(c)-1 to petitioner;
and (2) the propriety of the fine imposed upon the latter.
The Petition is not meritorious.
Held: The Petition is hereby DENIED, and the assailed Decision of the Court of Appeals AFFIRMED.
First Issue: Applicability of the Assailed RSA Implementing Rule Because its securities are exempt from the registration
requirements under Section 5(a)(3) of the Revised Securities Act, petitioner argues that it is not covered by RSA Implementing
Rule11(a)-1, which requires the filing of annual, quarterly, current predecessor and successor reports; Rule 34(a)-1, which
mandates the filing of proxy statements and forms of proxy; and Rule 34(c)-1, which obligates the submission of information
statements.
It must be emphasized that petitioner is a commercial banking corporation listed in the stock exchange. Thus, it must adhere
not only to banking and other allied special laws, but also to the rules promulgated by Respondent SEC, the government entity
tasked not only with the enforcement of the Revised Securities Act, but also with the supervision of all corporations,
partnerships or associations which are grantees of government-issued primary franchises and/or licenses or permits to operate
in the Philippines.
RSA Rules 11(a)-1, 34(a)-1 and 34(c)-1 require the submission of certain reports to ensure full, fair and accurate disclosure of
information for the protection of the investing public. These Rules were issued by respondent pursuant to the authority
conferred upon it by Section 3 of the RSA.
The said Rules do not amend Section 5(a)(3) of the Revised Securities Act, because they do not revoke or amend the exemption
from registration of the securities enumerated thereunder. They are reasonable regulations imposed upon petitioner as a
banking corporation trading its securities in the stock market.
Second Issue: Propriety of Fine Imposed Contending that both respondent and the CA erred in imposing an excessive fine upon
it, petitioner complains that it was not given an opportunity to be heard regarding the matter. It bears stressing that the fine
imposed upon petitioner is sanctioned by Section 46(b) of the RSA, which reads as follows:
Sec. 46. Administrative sanctions. If, after proper notice and hearing, the Commission finds that there is a violation of this Act,
its rules, or its orders or that any registrant has, in a registration statement and its supporting papers and other reports
required by law or rules to be filed with the Commission, made any untrue statement of a material fact, or omitted to state any
material fact required to be stated therein or necessary to make the statements therein not misleading, or refused to permit
any lawful examination into its affairs, it shall, in its discretion.
time, ICMC's request for recognition as a specialized agency was still pending with the Department of Foreign Affairs
(DEFORAF). Subsequently, DEFORAF, granted ICMC the status of a specialized agency with corresponding diplomatic privileges
and immunities, as evidenced by a Memorandum of Agreement between the Government and ICMC.
ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election sustaining the affirmative of the
proposition citing:
(1) its Memorandum of Agreement with the Philippine Government giving it the status of a specialized agency, (infra); (2) the
Convention on the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21 November
1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949 (the Philippine Instrument of
Ratification was signed by the President on 30 August 1949 and deposited with the UN on 20 March 1950) infra; and (3) Article
II, Section 2 of the 1987 Constitution, which declares that the Philippines adopts the generally accepted principles of
international law as part of the law of the land
ISSUE:
Whether or not the grant of diplomatic privileges and immunites to ICMC extends to immunity from the application of
Philippine labor laws.
HELD:The foregoing issue constitute a categorical recognition by the Executive Branch of the Government that ICMC enjoys
immunities accorded to international organizations, which determination has been held to be a political question conclusive
upon the Courts.
ICMC's immunity from local jurisdiction by no means deprives labor of its basic rights, which are guaranteed by Article II,
Section 18, Article III, Section 8, and Article XIII, Section 3 (supra), of the 1987 Constitution. For, ICMC employees are not
without recourse whenever there are disputes to be settled. Section 31 of the Convention on the Privileges and Immunities of
the Specialized Agencies of the United Nations 17 provides that "each specialized agency shall make provision for appropriate
modes of settlement of: (a) disputes arising out of contracts or other disputes of private character to which the specialized
agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement between ICMC the the Philippine
Government, whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges and
immunities accorded. "The immunity covers the organization concerned, its property and its assets. It is equally applicable to
proceedings in personam and proceedings in rem."
PSE VS. CA
287 SCRA 232 Business Organization Corporation Law Extent of Power of the Securities and Exchange Commission
Puerto Azul Land, Inc. (PALI) is a corporation engaged in the real estate business. PALI was granted permission by the Securities
and Exchange Commission (SEC) to sell its shares to the public in order for PALI to develop its properties.
PALI then asked the Philippine Stock Exchange (PSE) to list PALIs stocks/shares to facilitate exchange. The PSE Board of
Governors denied PALIs application on the ground that there were multiple claims on the assets of PALI. Apparently, the
Marcoses, Rebecco Panlilio (trustee of the Marcoses), and some other corporations were claiming assets if not ownership over
PALI.
PALI then wrote a letter to the SEC asking the latter to review PSEs decision. The SEC reversed PSEs decisions and ordered the
latter to cause the listing of PALI shares in the Exchange.
ISSUE: Whether or not it is within the power of the SEC to reverse actions done by the PSE.
HELD: Yes. The SEC has both jurisdiction and authority to look into the decision of PSE pursuant to the Revised Securities Act
and for the purpose of ensuring fair administration of the exchange. PSE, as a corporation itself and as a stock exchange is
subject to SECs jurisdiction, regulation, and control. In order to insure fair dealing of securities and a fair administration of
exchanges in the PSE, the SEC has the authority to look into the rulings issued by the PSE. The SEC is the entity with the primary
say as to whether or not securities, including shares of stock of a corporation, may be traded or not in the stock exchange.
HOWEVER, in the case at bar, the Supreme Court emphasized that the SEC may only reverse decisions issued by the PSE if such
are tainted with bad faith. In this case, there was no showing that PSE acted with bad faith when it denied the application of
PALI. Based on the multiple adverse claims against the assets of PALI, PSE deemed that granting PALIs application will only be
contrary to the best interest of the general public. It was reasonable for the PSE to exercise its judgment in the manner it
deems appropriate for its business identity, as long as no rights are trampled upon, and public welfare is safeguarded.