In the Matter of Red Sea Bar & Restaurant, Inc.

March 6, 2014 SEC ADMINISTRATIVE CASE NO. 09-01-03 (CED Case No. 20-2404) IN THE MATTER OF RED SEA BAR & RESTAURANT, INC., INSPECTION AND SURVEILLANCE DIVISION , petitioner . FOR : Revocation of Certificate of Incorporation ORDER This resolves the Petition 1 filed by Atty. Maria Martinelli R. Janolo of the Inspection and Surveillance Division of the Commission praying for the revocation of the registration of RED SEA BAR & RESTAURANT, INC. (RSBRI), a duly-organized stock corporation with SEC Reg. No. 199911738. It was alleged that based on the post audit findings of Ms. Gloria R. Lizano of the Corporate Audit Division of the then Supervision and Monitoring Department of the Commission, the deposit of RSBRI's initial paid-up capitals were closed as of verification date and conference letters were sent regarding submission of sources and application of funds but the Treasurer in Trust up to that time had not submitted any proof that the funds were used for their corporate purposes. 2 It was further alleged that upon failure of the Treasurer in Trust to appear at the scheduled conference and submit cash flow statement and supporting documents regarding the application and disbursement of its paid-up capital in the amount of two hundred fifty thousand pesos (P250,000.00), which was withdrawn from PCI Bank, New York Branch 519, an order was issued by investigating officer Gloria M. Ceralde giving the respondent an opportunity to appear and submit said documents and further informing the latter that failure to do so is a ground for revocation of its certificate of registration pursuant to Sec. 6 (l) (3) of PD 902-A. 3 Considering the lapse of fifteen days from the time of receipt of the Order and no appearance and submission of documents were made by the respondent, the petitioner filed the instant petition. 4 EIcSDC Section 6, paragraphs (i) (3) of PD 902-A, as amended, expressly provides that refusal to comply with any lawful order of the Commission restraining commission of acts is one of the grounds for revocation of the certificate of registration of corporations, viz. "Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers: . . . (i) To suspend, or revoke, after proper notice and hearing, the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law, including the following: . . . (3) Refusal to comply or defiance of any lawful order of the Commission restraining commission of acts which would amount to a grave violation of its franchise; In the instant case, the order issued by the Commission is one that requires respondent's duly authorized representative/s to appear in a conference before a Department of the Commission and to submit cash flow statements and supporting documents regarding its application and disbursement of its paid-up capital of two hundred fifty thousand pesos (P250,000.00) which was withdrawn from PCI Bank, New York Branch 519. 5 Clearly, there was no lawful order of the Commission restraining respondent's commission of acts which would amount to a grave violation of its franchise. Accordingly, failure to attend a conference and non-submission of certain documents are not defiance of a lawful order of the Commission restraining commission of acts contemplated under PD 902-A warranting the imposition of the supreme penalty of revocation of its franchise. At the most, such acts of respondent may be punishable by contempt. On another point, upon inquiry with the Company Registration and Monitoring Department (CRMD), RSBRI appears to have failed to file its General Information Sheet for the years 2000 to 2002 and 2004 to present and its Financial Statements since 2005. 6 The non-filing of reports may be a ground for the CRMD to revoke, after complying with due process, RSBRI's Certificate of Incorporation. 7 ECcDAH WHEREFORE, premises considered, the instant Petition is hereby DISMISSED for lack of merit. For failure of RED SEA BAR & RESTAURANT, INC. to file its Financial Statements and General Information Sheets for a period longer than at least five (5) years, the matter is hereby referred to the Company Registration and Monitoring Department for appropriate action. SO ORDERED. Mandaluyong City, March 6, 2014. (SGD.) TERESITA J. HERBOSA Chairperson (SGD.) MA. JUANITA E. CUETO Commissioner MANUEL B. GAITE Commissioner (SGD.) ELADIO M. JALA Commissioner (SGD.) ANTONIETA F. IBE Commissioner Footnotes 1. Records, Petition dated 14 September 2001, pp. 1-38. 2. Id. , p. 38. 3. Id. , p. 37. 4. Id. , p. 37. 5. Records, pp. 1-2. 6. Id. , p. 42. 7. SEC Resolution No. 359, series of 2010: "RESOLVED, To Authorize the Company Registration and Monitoring Department to revoke, after complying with due process , Certificates of Incorporation of registered partnerships or corporations on the following grounds: . . . 4. If companies fail to file/register for a period of at least five (5) years any of the following: (i) Financial Statements ; (ii) General Information Sheets ; and (iii) Stock and Transfer Book/Membership Book. . . ." (Emphasis ours)