In Matter of P.S.J. Carlos Development Corporation

[PED * CASE NO. 95-1915. January 13, 1997.] IN THE MATTER OF P.S.J. CARLOS DEVELOPMENT CORP. O R D E R This pertains to the referral for appropriate action involving subject Corporation from the Supervision and Monitoring Department (SMD) to the Prosecution and Enforcement Department (PED) of this Commission. The Supervision and Monitoring Department (SMD) found that subject corporation failed to comply with SMD's directive(s) dated October 11, 1994 and January 17, 1995 relative to the requirement of transferring title(s) of real properties used as paid-up capital under the name of the corporation so formed and furnishing the Commission copy of the Transfer of Certificate of Title under the corporation's name. The properties consist of six(6) parcels of land and improvements situated at Industria Street, 1291 Street, Labores Street, Pandacan, Manila and San Bartolome, Novaliches, Quezon City, owned and registered in the name of POTENCIANA S.J. CARLOS, single, and more particularly described, as follows: TCT NO Tax Kind Area F.M.V Declaration No. 86688 B-092-00812 Land 93.85 P610,025.00 Improvement 319,455.00 83958 B-092-00491 Land 56.30 365,950.00 171699 C-097-03431 Land 4,983 12,457,500.00 171601 C-097-03451 Land 498 1,494,000.00 284287 C-097-03819 Land 295 1,178,000.00 286288 C-097-03811 Land 294 Total P16,424,930.00 ============ On May 16, 1995, the Prosecution and Enforcement Department thru then Hearing Officer Evillo C. Pormento, issued subpoenas to the following incorporators, to mention: Potenciana S.J. Carlos, Sixto S.J. Carlos and Ireneo S.J. Carlos. As evidenced by the return slips attached and forming part of the records of the case, said respondents were duly served but failed to appear. On May 31, 1995 or fifteen days after the service of the said PED subpoena, a certain Vicente Mario Carlos Arreza, also an incorporator, personally appeared and manifested to submit the required Certificate of Transfer of Title under the name of the corporation on or, before June 28, 1995. The records however, show that up to this time subject corporation or any authorized representative has not presented any evidence to show that Title(s) of the concerned real properties has been transferred to it. On July 20, 1995, Hearing Officer Edgar P. Sanchez to whom the case was re-assigned, issued and duly served a SHOW CAUSE ORDER, as shown by a return slip. On October 3, 1995, a Manifestation was filed and submitted by certain Hilario N. Mapino Jr.,manifesting as counsel of subject corporation, prayed for six (6) months from date within which to secure and furnish the Transfer of Certificate of Title of the real properties already in the name of P.S.J. Carlos Development Corporation and consequently furnish the Commission. On October 18, 1995, or almost one (1) year from the date (October 11, 1994) of the first SMD directive to comply, Notice of Conference was moreover issued and duly served as evidenced by the return slip of certain incorporators: Potenciana S.J. Carlos and Bernardo S.J. Carlos, purposively to give them an extended chance to confer and deal with this Commission relative to the case at bar. Said notice, however, was left unattended. The records of the case would show that respondent incorporators officers unjustifiably refused to obey the Commission's directive despite the more than sufficient time given them. Such patent failure constitutes refusal to comply with or defiance of the (lawful) order(s) of this Commission, which left this Commission no recourse but to impose the appropriate sanction pursuant to P.D. 902-A, as amended. Under P.D. 902-A, as amended, Section 6 (i) states: To suspend or revoke, after notice and hearing, the franchise or Certificate of Registration of corporation ...upon any grounds provided by law, including the following: xxx xxx xxx 3. Refusal to comply with or defiance of any order of the Commission ... Anent to the SMD's directive on the transfer of Certificate of Title in the name of the subject corporation, is the Guidelines Covering the Use of Properties that Require Ownership Registration As Paid-up capital of Corporation . As further aforeshown by the records, despite order(s) from the SMD to comply with the conveyance and transfer of ownership of the land in favor of the entity and correspondingly secure and furnish the Commission Transfer of Certification(s) of Title and subsequent order(s) hearings by the PED, the respondent incorporators failed to comply. Hence, it is clearly indubitable that said respondents utterly disregarded compliance with that substantial requirement relative to "the Use of Properties as Paid-up Capital of Corporations".The provision of such mandatory "Guidelines" are hereunto mentioned: Guidelines Covering The Use of Properties That Require Ownership Registration As Paid-Up Capital of Corporations. In the interest of investors and creditors in stock corporation, the following guidelines are hereby adopted by the Commission, in connection with land, and other properties requiring ownership registration ...which are used as paid-up capital of stock corporations. 1. That where any of the aforesaid properties is conveyed to a corporation as payment on subscription to the shares of stock of the latter, the Commission's approval of the related application filed thereon shall be subject to the following conditions: a) Where the payment is made in the form of land, the corresponding shares of stock to be issued thereon shall be held in escrow by the Commission and shall be released only after proof of the Transfer of the Certificate(s) of Ownership thereon, in the name of the transferee corporation, is submitted to this Commission within ninety (90) days from the date of approval of the application extendible for justifiable reasons; xxx xxx xxx 2. The non-submission of the documents as required above, within the prescribed period, after due notice and hearing, shall be ground for the revocation of the related application approved by the Commission or for the institution may deem fit under the circumstances. IN VIEW OF THE FOREGOING PREMISES, it is hereby ordered that the application of real properties described and forming part of the records of the case, to be issued as paid-up capital of P.S.J. Carlos Development Corporation bearing SEC Registration No. ASO94-003050 be REVOKED pursuant to the No. 2 provision under the Guidelines Covering the Use of Properties that Require Ownership registration as Paid-up Capital of Corporations and that the Certificate of Registration of said corporation be correspondingly revoked for insufficiency of the initial paid-up capital as a consequence of the failure to transfer titles of ownership in favor of or under the name of subject corporation, hence in violation of Sections 13 and 14 in relation to Section 144 of B.P. Blg. 68 (Corporation Code) and in pursuant to Section 6 (i) of P.D. No. 902-A, as amended, for having unjustifiably refused to comply with and disregarded lawful order of the Securities and Exchange Commission. Let Copy of this Order be furnished the Records Division for the de-listing of the name P.S.J. Carlos Development Corporation bearing SEC-Registry No. ASO94-003050 as registered and the BIR for whatever action it may deem necessary. SO ORDERED. GABRIEL M. MARTINEZ Attorney II APPROVED BY: THELMA T. MUNDIN Chief, Prosecution Division NOTED BY: OTILIO C. SANDIEGO Director Prosecution & Enforcement Department