In the Matter of Joyslli Grace R2C Disk Distributors, Inc.

February 13, 2014 SEC CASE NO. 07-04-28 IN THE MATTER OF JOYSLLI GRACE R2C DISK DISTRIBUTORS, INC., RICHARD G. GAN , petitioner . FOR : Cancellation of Certificate of Incorporation ORDER This refers to the Petition 1 filed by petitioner Richard G. Gan with the Commission praying for the cancellation of the registration of JOYSLLI GRACE R2C DISK DISTRIBUTORS, INC. (Joyslli). The instant Petition lacks the required Certificate of Non-Forum Shopping pursuant to the Revised Rules of Procedure of the Commission (Rules). 2 Moreover, the authority of the petitioner to sue was not correctly averred in the Petition. 3 The Petition was not supported by a board resolution of Joyslli authorizing the petitioner to file and prosecute the same. Clearly, the instant Petition should be dismissed since it is insufficient as to form. Even assuming that the instant Petition is sufficient in form under the Rules, it has not complied with the substantial requirements of Section 118 of the Corporation Code. It is necessary that the following requirements for voluntary dissolution "where no creditors are affected" be complied with: (i) it does not prejudice the rights of any creditor having a claim against it; (ii) it should be effected by a majority vote of the board of directors or trustees; (iii) it should be by a resolution duly adopted by the affirmative vote of the stockholders owning at least two-thirds (2/3) of the outstanding capital stock or of at least two-thirds (2/3) of the members in a meeting to be held upon call of the directors or trustees; (iv) The notice of time, place and object of the meeting should be published for three (3) consecutive weeks in a newspaper published in the place where the principal office of said corporation is located, and if no newspaper is published in such place, then in a newspaper of general circulation in the Philippines, after sending such notice to each stockholder or member either by registered mail or by personal delivery at least thirty (30) days prior to said meeting; and (v) a copy of the resolution authorizing the dissolution should be certified by a majority of the board of directors or trustees and countersigned by the secretary of the corporation. 4 TaHDAS After a careful scrutiny of the Petition, we find that the same failed to comply with the above-mentioned requirements. Records show that the petitioner failed to submit the following: (i) a copy of the resolution certified by a majority of the Board of Directors and countersigned by the secretary of the corporation which authorizes the dissolution of Joyslli; (ii) a copy of the resolution adopted by the affirmative vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock; and (iii) proof as to the publication for three (3) consecutive weeks of the notice of the time, place and object of the meeting in a newspaper which must be published where Joyslli is located. The Petition merely stated that Joyslli ceased to operate because of its bankruptcy since April 2001 and that the Regional Trial Court (RTC) 5 declared it to be insolvent. Moreover, the petitioner merely attached to the Petition a Letter 6 addressed to the Commission stating that the subscribed capital stock of the members of the Board of Directors of Joyslli has been fully paid and informing the latter that Joyslli ceased to operate due to bankruptcy. A Certification 7 of the petitioner which stated that the subscribed capital stock of the members of the Board of Directors of Joyslli has been fully paid and the above-mentioned Decision of the RTC, was likewise attached to the Petition. It must be noted that the Decision of the RTC mentioned that Joyslli has no creditors. 8 As a consequence, an Order dated 25 August 2004 was issued by the Commission directing the petitioner to file the following documents: (i) a resolution duly approved by at least a majority of the Board of Directors and adopted by the affirmative vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock; (ii) a joint affidavit executed by the Board of Directors that Joyslli has no creditors; (iii) latest audited financial statement; (iv) a certified true copy of above-stated Decision of RTC; (v) certificate of finality of the Decision of the RTC; (vi) an entry of judgment; and (vii) a publisher's affidavit and notice of dissolution/cancellation of certificate of registration for three (3) consecutive weeks in a newspaper published in the place where the principal office of said corporation is located. However, the petitioner failed to fully comply with the requirements of the 25 August 2004 Order because the following are still lacking: (i) A certified true copy of the board resolution dissolving the corporation as approved by at least two-thirds (2/3) of the outstanding capital stock of the stockholders of Joyslli; (ii) Latest Audited Financial Statement; and (iii) Certificate of Tax Clearance issued by the Bureau of Internal Revenue (BIR). 9 HaEcAC Thus, the instant Petition must necessarily fail for failure to comply with the requirements under Section 118 of the Corporation Code and corollary documents. On another point, upon inquiry with the Company Registration and Monitoring Department (CRMD), Joyslli appears to have failed to file its General Information Sheet since 2001 and its Financial Statements since 2000. 10 The non-filing of reports may be a ground for the CRMD to revoke, after complying with due process, Joyslli's Certificate of Incorporation. 11 WHEREFORE, premises considered, the instant Petition is hereby DISMISSED for the failure of petitioner Richard G. Gan to comply with the formal requirements. For failure of JOYSLLI GRACE R2C DISK DISTRIBUTORS, INC. to file its Financial Statements and General Information Sheets for a period longer than least five (5) years, the matter is hereby referred to the Company Registration and Monitoring Department for appropriate action. SO ORDERED. Mandaluyong City, February 13, 2014. (SGD.) TERESITA J. HERBOSA Chairperson (SGD.) MA. JUANITA E. CUETO Commissioner (SGD.) MANUEL B. GAITE Commissioner (SGD.) ELADIO M. JALA Commissioner (SGD.) ANTONIETA F. IBE Commissioner Footnotes 1. Petition dated 18 June 2004 filed with the Commission on 22 June 2004. 2. Sections 3-4, Rule III of the Rules. 3. Sections 3-9, Rule III of the Rules. 4. In the Matter of Aegean Trading Corporation, SEC Case No. 01-06-103 dated 19 November 2013. 5. Decision of the RTC in SP. Proc. No. 10106-AF on 6 April 2004 in the case entitled "In the Matter of Declaration of Insolvency/Bankruptcy of JOYSLLI GRACE R2C DISK DISTRIBUTORS, INC. Ong Yee Siong, Lilia Gan, Richard G. Gan, Charles G. Gan, Catherine G. Yao, petitioners". 6. Dated 18 June 2004. 7. Dated 14 June 2004. 8. RTC Decision, p. 4. 9. The petitioner merely submitted the following: (1) Resolution of the board of directors of Joyslli dated 19 June 2003 declaring the dissolution of Joyslli; (2) Joint Affidavit dated 25 August 2004 executed by the board of directors that Joyslli has no creditors; (3) Certified True Copy of the Decision of the RTC; (4) Certificate of Finality dated 21 May 2004 of the RTC decision issued by the court; (5) Entry of Judgment certified by the RTC on 3 September 2004; (6) Publisher's Affidavit by the newspaper CC-NE News on Line, a weekly publication in Cabanatuan City, stating that the Notice of Dissolution/Cancellation of Certificate of Registration of Joyslli was published on November 4, 12 and 19, 2003; and (7) Notice of Dissolution of Joyslli. 10. Records, p. 30. 11. 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)