July 1, 2010

SEC EN BANC CASE NO. 10-09-180

IN THE MATTER OF SALVACION ACOPIO, SEVERINO BAROZA, JR.,

ARTEMIO CAPALARAN, AND NINA VASQUEZ, petitioners-appellees, vs. J.R.
ESTRADA & SONS, INC., respondent-appellant.

DECISION

For consideration is the Notice of Appeal with Memorandum on Appeal

dated 21 October 2009 filed by J.R. Estrada & Sons, Inc. ("J.R. Estrada")
assailing the Order of Revocation dated 06 October 2009 issued by the
Director of the Company Registration and Monitoring Department ("CRMD").
Facts of the Case
J.R. Estrada is a stock corporation registered 1 with the Commission on
26 June 1964, with business and principal office address at Rm. 204 Medical
Arts Building, T.M. Kalaw Avenue, Ermita, Manila. 2
On 08 July 2008, a certain Salvacion Acopio filed a "Formal Letter of
Complaint" addressed to CRMD, requesting the revocation of J.R. Estrada's
Certificate of Registration due to non-filing of its General Information Sheet
(GIS) since 1996 and for not having a principal office or place of business.
On 05 August 2008, CRMD issued a Notice of Conference addressed to
J.R. Estrada, directing it to appear for a conference scheduled on 26 August
2008 and to show cause why it should not be penalized for the non-filing of
its GIS from 1996 to 2007 and its Financial Statements for 1996 and 1999.
However, no officer or representative of J.R. Estrada appeared during the
conference.
On 14 October 2008, CRMD issued a Final Notice of Conference,
likewise addressed to J.R. Estrada, informing it again of its violations and
directing it to submit several required documents and to pay the fines that
will be assessed upon submission of the said documents.
This time, a certain Artemio E. Salingay appeared before CRMD in
behalf of J.R. Estrada. Thus, he was informed that J.R. Estrada was being
assessed with fines in the total amount of Php118,500.00 to be paid not later
than 30 November 2008. aHSTID

Nonetheless, J.R. Estrada failed to pay the said fines on the due date. In
a letter dated 07 January 2009, 3 J.R. Estrada, through its president,
Remedios E. Alcabao, requested the deferment of payment of the said fines
due to unavailability of funds.
On 13 January 2009, 4 Salvacion Acopio and the three (3) other
Appellees herein filed a Petition for Revocation of J.R. Estrada's Certificate of
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 Registration, thereby supplementing the "Formal Letter of Complaint" earlier
filed.
On 27 January 2009, CRMD issued a "Summons/Subpoena" requiring
J.R. Estrada to submit its answer to the said Petition as well as the
supporting documents and affidavits. The same was sent to J.R. Estrada in
the address 5 indicated in its 2008 General Information Sheet. However,
after several attempts to serve the same, it was returned to the Commission
stamped with "Return to Sender Unclaimed".
Thus, on 06 October 2009, CRMD issued the assailed order revoking
J.R. Estrada's Certificate of Incorporation for violation of the Corporation
Code and the SEC Rules on reportorial requirements.
To wit, the order of the CRMD reads:
"Clearly, Respondent's failure to file its GIS from 1996-2007, the
late filing of its 2008 GIS, the late registration of its Stock and
Transfer Book and the non-settlement of the assessed fines to date,
aggravated by the change of principal office without proper
amendment of its AI, false office address and disregard of a show
cause order, are sufficient grounds to revoke its Certificate of
Incorporation."
Hence, the instant appeal.
Issue
The issue to be resolved is whether or not the order revoking J.R.
Estrada's Certificate of Incorporation was proper.
Ruling
We rule in the negative.
J.R. Estrada is alleged to have violated the provisions of the
Corporation Code and rules on reportorial requirements.
J.R. Estrada tries to justify its lapses by claiming lack of awareness of
the law and the Commission's reportorial rules and regulations. Under the
basic legal principle imbued in the Latin maxim "ignorantia legis non
excusat", everyone is presumed to know the law, and one's ignorance
thereof is not an excuse. Moreover, the corporation was given notice and
adequate opportunity to be heard. The CRMD sent no less than two (2)
notices 6 to J.R. Estrada at its principal office address as indicated in its 2008
GIS. However, J.R. Estrada, through its representative, Artemio E. Salingay,
appeared only on 11 November 2008.
Furthermore, contrary to J.R. Estrada's claim that it was never
summoned/subpoenaed by CRMD regarding the Petition for Revocation filed
by the Appellees herein, a "Summons/Subpoena" was issued by the CRMD 7
but was returned unclaimed. Upon perusal, there is a discrepancy in the
principal office address indicated in its 2008 GIS and the address stated 8 in
its Articles of Incorporation, and without proper amendment of the said
Articles, giving rise to a violation of Section 16 9 of the Corporation Code.
Section 144 of the Corporation Code provides that:
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 "Sec. 144. Violations of the Code. — Violations of any of the
provisions of this Code or its amendments not otherwise specifically
penalized therein shall be punished by a fine of not less than one
thousand (P1,000.00) pesos but not more than ten thousand
(P10,000.00) pesos or by imprisonment for not less than thirty (30)
days but not more than five (5) years, or both, in the discretion of the
court. If the violation is committed by a corporation, the same may,
after notice and hearing, be dissolved in appropriate proceedings
before the Securities and Exchange Commission: Provided, That such
dissolution shall not preclude the institution of appropriate action
against the director, trustee or officer of the corporation responsible
for said violation: Provided, further, That nothing in this section shall
be construed to repeal the other causes for dissolution of a
corporation provided in this Code." aATCDI

Among the powers of the Commission is to impose the appropriate

sanctions for violations of the Corporation Code and Commission rules and
regulations.
However, all available remedies should be exhausted before visiting
upon the corporation the harsh penalty of revocation. Forfeiture of a
corporation's charter will not be decreed unless no other adequate remedy is
available. 10
The Corporation Law (now Corporation Code) must be given a
reasonable, not an unduly harsh, interpretation which does not hamper the
development of trade relations and which fosters friendly commercial
intercourse among countries. 11 Moreover, in the exercise of supervisory and
regulatory functions over corporations registered with the SEC, the
Corporation Code should be given a reasonable or liberal construction which
will best execute its purpose, even though such construction is not within its
strict literal interpretation. A strict construction should not be permitted to
defeat the policy and purpose of the Code, 12 that is, "to establish a new
concept of business corporations so that they are not merely entities
established for private gain but effective partners of the National
Government in spreading the benefits of capitalism for the social and
economic development of the nation." 13
Section 5.1 (f) of the Securities Regulation Code 14 and Section 6 (l) of
Presidential Decree No. 902-A, as amended, read as follows:
"Sec. 5. Powers and Functions of the Commission. — 5.1. The
Commission shall act with transparency and shall have the powers
and functions provided by this Code, Presidential Decree No. 902-A,
the Corporation Code, the Investment Houses Law, the Financing
Company Act and other existing laws. Pursuant thereto the
Commission shall have, among others, the following powers and
functions:
xxx xxx xxx
(f) Impose sanctions for the violation of laws and the rules,
regulations and orders issued pursuant thereto;
xxx xxx xxx"

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 "Sec. 6. In order to effectively exercise such jurisdiction, the
Commission shall possess the following powers:
xxx xxx xxx
(l) To impose fines and/or penalties for violation of this Decree
or any other laws being implemented by the Commission, the
pertinent rules and regulations, its orders, decisions and/or rulings;
xxx xxx xxx
In the present case, J.R. Estrada showed its willingness to rectify its
lapses and comply fully with the requirements under the law and regulations.
Thus, revocation may be too harsh a penalty when there are available
sanctions that may be imposed upon J.R. Estrada that do not diminish nor
render trivial the gravity of the offenses it committed for its non-compliance
with the Corporation Code and the rules and regulations of the Commission.
WHEREFORE, premises considered, the instant appeal is hereby
PARTIALLY GRANTED. The Order of Revocation dated 06 October 2009,
revoking the Certificate of Incorporation of J.R. Estrada & Sons, Inc., is
hereby SET ASIDE.
For violations of reportorial requirements and Article 16 of the
Corporation Code, J.R. Estrada & Sons, Inc. is hereby ordered to pay a FINE,
the final amount to be computed by the Company Registration and
Monitoring Department, for immediate compliance within ten (10) days from
the date of receipt of this decision. J.R. Estrada & Sons, Inc. is hereby
DIRECTED to submit proof of compliance with this decision.
SO ORDERED. IDASHa

Mandaluyong City, July 1, 2010.

(SGD.) FE B. BARIN
Chairperson

(SGD.) MA. JUANITA E. CUETO

Commissioner

(SGD.) RAUL J. PALABRICA

Commissioner

on leave of absence
MANUEL HUBERTO B. GAITE
Commissioner

(SGD.) ELADIO M. JALA

Commissioner
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 Footnotes
1. SEC Registration No. 25379.
2. Based on the 2008 General Information Sheet of J.R. Estrada & Sons, Inc.

3. Filed with the Commission on 21 January 2008.

4. Records of the case show that the Petition was filed on this date. The date "29
April 2009" as the date of the Petition appearing in CRMD's Order dated 06
October 2009 is merely a typographical error.

5. Rm. 204 2/F Medical Arts Bldg., T.M. Kalaw, Ermita, Manila.
6. The CRMD issued a Notice of Conference dated 05 August 2008 directing it to
appear for a conference on 26 August 2008 and the second was the Final
Notice of Conference dated 14 October 2008.
7. Summons/Subpoena dated 27 January 2009.

8. Pasay City.
9. Sec. 16. Amendment of Articles of Incorporation. — Unless otherwise
prescribed by this Code or by special law, and for legitimate purposes, any
provision or matter stated in the articles of incorporation may be amended
by a majority vote of the board of directors or trustees and the vote or
written assent of the stockholders representing at least two-thirds (2/3) of
the outstanding capital stock, without prejudice to the appraisal right of
dissenting stockholders in accordance with the provisions of this Code . . . .
The original and amended articles together shall contain all provisions required
by law to be set out in the articles of incorporation. Such articles, as
amended shall be indicated by underscoring the change or changes made,
and a copy thereof duly certified under oath by the corporate secretary and
a majority of the directors or trustees stating the fact that said amendment
or amendments have been duly approved by the required vote of the
stockholders or members, shall be submitted to the Securities and
Exchange Commission.

The amendments shall take effect upon their approval by the Securities and
Exchange Commission or from the date of filing with the said Commission if
not acted upon within six (6) months from the date of filing for a cause not
attributable to the corporation.

10. Fletcher Cyclopedia Corporations, Permanent Edition, Volume 16-A, p. 145.

11. Home Insurance Company vs. Eastern Shipping Lines, G.R. No. 34382, July 20,
1983.

12. SEC Opinion No. 04-36, addressed to SGV & Co., 15 June 2004.
13. Explanatory Note to Cabinet Bill No. 3, which became the basis for the
Corporation Code enacted by the then Interim Batasang Pambansa.
14. Republic Act No. 8799 (2000).

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