In the Matter of TG Asset Management Corporation

January 13, 2004 SEC ADMINISTRATIVE CASE NO. 02-03-69 IN THE MATTER OF TG ASSET MANAGEMENT CORPORATION PREMIERE DEVELOPMENT BANK FOR : Revocation of Corporate Registration ORDER Before this Commission is a Petition for the Revocation of the Certificate of Registration of TG ASSET MANAGEMENT CORPORATION ("TG ASSET") filed by the Compliance and Enforcement Department ("CED") on February 6, 2003. DAEIHT On April 15, 2003, the Commission issued a Show Cause Order directing the company to show cause, within fifteen (15) days from receipt thereof, why its certificate of registration should not be revoked pursuant to P.D. 902-A, as amended, Article 1 (f), Rule 1, Part 4 of SEC Circular No. 4, Series of 2001, and Sec. 3 (A) (5) of the Revised Rules and Regulations for Submission/Verification of the Bank Certificate of Deposit and Application of Initial Paid-Up Capital 1 ("Revised Rules") . It also directed PREMIERE DEVELOPMENT BANK ("Premiere Bank") to show cause why it should not be declared "blacklisted" in accordance with Sec. 1 (B) of the Revised Rules. TG ASSET failed to file its answer despite valid service of the Order. Art. 4, Rule II, Part 4 of SEC Circular No. 4, series of 2001 2 provides that if respondent fails to file its answer within the prescribed period, the Commission shall grant the relief sought by the petitioner. On the other hand, Premiere Bank submitted its Answer and/or Explanation on November 13, 2003. After thorough review of the evidence submitted, we find reasonable grounds to grant the Petition. Records show the TG ASSET was incorporated on September 3, 2001 under SEC Registration No. A20011593. The respondent incorporators/officers/directors of respondent TG ASSET are as follows: Name Address Roemel C. Mamuric Block 3 Lot 3 Soldiers IV, Bacoor, Cavite Rico Z. Puerto Block 1 Lot 1 Casimiro Townhomes, Admiral Village Talon 3, Las Pias City Jeremey T. Escote Unit 10 Trans-American Townhouse, 808 E. Rodriguez Avenue, New Manila, Quezon City Zoraida F. Enerio 10 Brosas Street, BFRV, Las Pias City Nelda B. Baran 3 Ilang-ilang Street, Block 5 Phase 1 CAA, Las Pias City To support the incorporation of the company, the incorporators filed with this Commission, among others, a Treasurer's Affidavit executed under oath by Ms. Zoraida F. Enerio, dated August 2, 2001, stating that Twenty Million Pesos (P20,000,000.00) worth of shares have been subscribed and paid-up in cash for the benefit and the credit of the respondent corporation and that the paid-up capital is deposited with the Premiere Bank-Pedro Gil Branch and Maybank-Quezon Boulevard Branch. 3 The respondent incorporators likewise submitted a bank certificate issued by Manuel D. Agoncillo, Branch Manager of Premiere Bank-Pedro Gil Branch dated 21 August 2001 certifying under oath that there is on deposit with the said bank the amount of Thirteen Million (Php13,000,000.00) under Savings Account No. 0119-15-02799-0 in the name of Zoraida F. Enerio as Treasurer-in-Trust of respondent TG ASSET. 4 The respondent incorporators also submitted a bank certificate dated 22 August 2001 issued by Ms. Estrella T. de Castro and Mr. Roderick Ricaforte, cashier and manager, respectively, of Maybank-Quezon Boulevard Branch stating that respondent TG ASSET has an account with the said bank under Savings Account No. 01-038-000677-8 with total deposits amounting to Seven Million Pesos (Php7,000,000.00). 5 On 16 September 2002, the Commission, through the CED, issued a letter addressed to the Branch Manager/Cashier/Accountant of Premiere Bank directing the latter to give all necessary information and documents relative to the bank account of respondent TG ASSET. On 17 September 2002, the CED conducted a bank verification on the savings deposit of TG ASSET with Premiere Bank-Pedro Gil Branch. An inspection of the "Peso Savings Account Ledger" for the period covering July to December 2001 of Savings Account No. 0119-15-02799-0 of respondent TG ASSET revealed that the amount of Php6.5 Million was withdrawn by TG ASSET on 31 August 2001 a few days before the approval of its incorporation papers by the Commission on 3 September 2001. 6 Neither TG ASSET nor Premiere Bank informed the Commission of the said withdrawal. Thus, the Commission was misled in approving the incorporation of the TG ASSET on the basis of the misrepresented fact that the company had adequate paid-up capital deposited at the Premiere Bank and Maybank at the time of approval. Fraud in procuring the certificate of registration is a ground for suspension or revocation of the certificate of registration under Art. 1, Rule 1, Part 4 of SEC Circular No. 4, series of 2001. Sec. 6 (1) of Presidential Decree No. 902-A, as amended, also provides that the Commission has the power [t]o suspend, or revoke, after proper notice and hearing, the franchise or certificate of registration of corporations, partnerships or association, upon any of the grounds provided by law, including the following 1. Fraud in procuring its certificate of registration; xxx xxx xxx" The withdrawal by representatives of respondent TG ASSET of the amount of Php6.5 Million from the Premiere Bank account prior to the approval of its incorporation papers is also a violation of the Revised Rules. Section 3 (A) (5) thereof expressly provides that [t]he Commission may, after due notice and hearing, subject the erring corporations, and/or depository bank to any of the following sanctions: A. Suspension or revocation of the registration of any corporation on any of the following grounds: xxx xxx xxx 5. The paid-up capital or a portion thereof was withdrawn prior to the registration of the articles of incorporation. (Emphasis ours.) For its part, Premiere Bank, through counsel, argues in its "Answer and/or Explanation" dated November 14, 2003 that the then Manager of its Pedro Gil Branch, Mr. Agoncillo, who executed the certification confirming the deposit of TG Asset was no longer connected with the Bank when the withdrawal was made; that the new Manager, Mr. Teodorico Tamayo Jr., who allowed the withdrawal of Php6.5M had no sufficient knowledge or information as to the use and purpose of the account being maintained by TG ASSET with the Bank; that the withdrawal was allowed by Mr. Tamayo as he relied on the good faith of the depositor and took into account the fundamental right of a depositor; and, that the bank cannot be declared in bad faith as the Manager was not "given a pertinent directive or instruction from this Commission or from the complainant relating to the nature and purpose of the account of TG ASSET with the SEC." It thus prays that it be held free from any effect of the withdrawal made by TG ASSET. AIaDcH We are not convinced. Premiere Bank, through its Manager Mr. Agoncillo, issued a certification addressed to this Commission dated 21 August 2003 declaring and certifying that the Php13M deposit made by TG ASSET is "clear and free from lien, restriction, condition or hold out and may be withdrawn in behalf of said company upon presentation of proof of due incorporation thereof " (emphasis ours) . Despite the said certification, the bank allowed the said withdrawal prior to the approval of the incorporation paper of TG ASSET. Needless to say, the Commission relied on the said certification issued by Premiere Bank when it approved the incorporation papers of TG ASSET. That the current Manager, Mr. Tamayo, allowed the withdrawal because he had "no sufficient knowledge or information as to the use and purpose of the account being maintained by [TG ASSET]" is a feeble excuse undeserving of any consideration. Sec. 3 (B) of the Revised Rules provide that "Banks and other institutions with similar functions authorized to receive deposits by the Central Bank which extend accommodation loans used as paid-up capital of corporations or allow the withdrawal or transfer of the said paid-up capital, or a part thereof, before the corporation is registered with the Commission shall be blacklisted and its certificate of deposit will not be honored by the Commission for such period as the Commission may deem proper. " (Emphasis ours) WHEREFORE, in view of the foregoing, the certificate of registration of TG ASSET MANAGEMENT CORPORATION under Registration Certificate No. A20011593 issued on September 3, 2001 is hereby ORDERED REVOKED. FURTHER, PREMIERE DEVELOPMENT BANK is hereby DECLARED BLACKLISTED for a period of SIX MONTHS. During the said period, the certificate of deposit issued by the bank will not be honored by the Commission. Let a copy of this Order be served upon the Company Registration and Monitoring Department so that the same can be attached to the corporate files of the subject corporations. SO ORDERED. Mandaluyong City, Metro Manila. January 13, 2004. (SGD.) LILIA R. BAUTISTA Chairman (SGD.) FE ELOISA C. GLORIA Commissioner (SGD.) JOSELIA J. POBLADOR Commissioner (SGD.) MA. JUANITA E. CUETO Commissioner (SGD.) JESUS ENRIQUE G. MARTINEZ Commissioner Footnotes 1. Dated April 5, 1991. 2. Procedures in the Enforcement of the Corporation Code of the Philippines, Securities Regulation Code, and other Existing Laws Implemented by the Commission. 3. See Annex "D" of Petition for the copy of the Treasurer's Affidavit. 4. See Annex "E" of Petition. 5. See Annex "F" of Petition. 6. See Annex "H" of Petition for a photocopy of the Peso Savings Account Ledger.