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PROVIDLN1 IN1LRNA1IONAL RLSOURCLS CORPORA1ION and CLLLDONIO

LSCAO, JR. v. JOAQUIN 1.VLNUS, et al.


G.R. No. J6704J, J7 June 2008, SLCOND DIVISION, (Quisumbing, J.)

1be ecvritie. ava cbavge Covvi..iov`. ;C) regvtator, avtborit, orer rirate cororatiov. evcova..e. a
riae vargiv of area., tovcbivg veart, att of a cororatiov`. covcerv.. 1bi. avtborit, vore ririat, .rivg. frov tbe fact tbat a
cororatiov ore. it. ei.tevce to tbe covce..iov of it. cororate fravcbi.e frov tbe .tate.

Cov.iaerivg tbat tbe C, after ave votice ava bearivg, ba. tbe regvtator, orer to rero/e tbe cororate fravcbi.e
- frov rbicb a cororatiov ore. it. tegat ei.tevce - tbe C vv.t ti/eri.e bare tbe te..er orer of veret, recattivg ava
cavcetivg a 1 tbat ra. erroveov.t, regi.terea.

Petitioner Proident International Resources Corporation ,PIRC, registered with the Securities
and Lxchange Commission ,SLC, in 199. Ldward 1. Marcelo, Constancio D. lrancisco, Lydia J.
Chuanico, Daniel 1. Pascual, and Jose A. Lazaro ,Marcelo group, were its incorporators, original
stockholders, and directors. 1he Asistio group ,composed o Luis A. Asistio, and respondents Joaquin 1.
Venus, Lazaro L. Madara, Alredo D. Roa III, and Jose Ma. Carlos L. Zumel,, claiming that the members
o the Marcelo group were mere trustees o the Asistio group, registered PIRC`s stock and transer book
,S1B, on August 2002.

Marcelo group`s assistant corporate secretary petitioner Celedonio Lscano, Jr., showed the SLC
that the group`s S1B was issued in 199. 1he SLC decided that the S1B registered on September 199
by the Marcelo group was alid. On appeal, the SLC ruling was annulled and set aside on the ground
that the S1B in issue is intra-corporate and is, thus, within the Regional 1rial Court`s decision. lence,
this petition.

ISSUL:

\hether or not the SLC has the jurisdiction to recall and cancel an S1B which it issued in 2002
because o its mistaken assumption that no stock and transer book had been preiously issued in 199

HLLD:

Petition GRAN1LD.

1he Securities Regulation Code ,Republic Act No. 899, proides:

Sec. 5. Porer. ava vvctiov. of tbe Covvi..iov - 5.1. 1he Commission shall act with
transparency and shall hae the powers and unctions proided by this Code, Presidential Decree No.
902-A, the Corporation Code, Pursuant thereto the Commission shall hae, among others, the
ollowing powers and unctions:

,a, are ;vri.aictiov ava .verri.iov orer att cororatiov., artver.bi. or a..ociatiov. rbo are tbe
gravtee. of rivar, fravcbi.e. ava,or a ticev.e or ervit i..vea b, tbe Corervvevt;.

,d, Regvtate, ivre.tigate or .verri.e tbe actiritie. of er.ov. to ev.vre covtiavce;
x x x

,n, erci.e .vcb otber orer. a. va, be roriaea b, tar a. rett a. tbo.e rbicb va, be ivtiea frov, or
rbicb are vece..ar, or ivciaevtat to tbe carr,ivg ovt of, tbe ere.. orer. gravtea tbe Covvi..iov to acbiere tbe
ob;ectire. ava vro.e. of tbe.e tar..

lrom the aboe, the Court said that SLC`s regulatory authority oer priate corporations
encompasses a wide margin o areas, touching nearly all o a corporation`s concerns. 1his authority more
iidly springs rom the act that a corporation owes its existence to the concession o its corporate
ranchise rom the state. Under its regulatory responsibilities, the SLC may pass upon applications or, or
may suspend or reoke ,ater due notice and hearing,, certiicates o registration o corporations,
partnerships and associations ,excluding cooperaties, homeowners` association, and labor unions,,
compel legal and regulatory compliances, conduct inspections, and impose ines or other penalties or
iolations o the Reised Securities Act, as well as implementing rules and directies o the SLC, such as
may be warranted.

Considering that SLC, ater due notice and hearing, has the regulatory power to reoke the
corporate ranchise - rom which a corporation owes its legal existence - the SLC must likewise hae
the lesser power o merely recalling and canceling a S1B that was erroneously registered.

Going to the particular acts o the instant case, the Court inds that the SLC has the primary
competence and means to determine and eriy whether the subject 199 S1B presented by the
incumbent assistant corporate secretary was indeed authentic, and duly registered by SLC as early as
September 199. As the administratie agency responsible or the registration and monitoring o S1Bs, it
is the body cognizant o the S1B registration procedures, and in possession o the pertinent iles, records
and specimen signatures o authorized oicers relating to the registration o S1Bs. 1he ealuation o
whether a S1B was authorized by the SLC primarily requires an examination o the S1B itsel and the
SLC iles. 1his unction necessarily belongs to the SLC as part o its regulatory jurisdiction. Contrary to
the allegations o respondents, the issues inoled in this case can be resoled without going into the
intra-corporate controersies brought up by respondents.

As the regulatory body, it is SLC`s duty to ensure that there is only one set o S1B or each
corporation. 1he determination o whether or not the 199-registered S1B is alid and o whether to
cancel or reoke the August 6, 2002 certiication and the registration o the 2002 S1B on the ground that
there is already an existing S1B is impliedly and necessarily within the regulatory jurisdiction o the SLC.