In the Matter of Tanglaw para sa Magsasaka Foundation, Inc. SEC Registration No. CN200806076

June 11, 2014 SEC CRMD CASE NO. 14-552 IN THE MATTER OF TANGLAW PARA SA MAGSASAKA FOUNDATION, INC. SEC REGISTRATION NO. CN200806076 FOR : Revocation of Corporate Registration on the Ground of Fraud in Procuring its Certificate of Incorporation ORDER For consideration of Company Registration and Monitoring Department ("CRMD") is the result of investigation on the operations of TANGLAW PARA SA MAGSASAKA FOUNDATION, INC. conducted by the Enforcement and Investor Protection Department ("EIPD") of this Commission. TANGLAW PARA SA MAGSASAKA FOUNDATION, INC. ("subject corporation") is a non-stock corporation registered on April 23, 2008 under SEC Registration No. CN200806076. Based on its articles of incorporation, the purposes for which it was established are as follows: "1. To promote and support social and economic development in the countryside through the implementation, initiation and/or execution of livelihood, income-generating and social development programs and projects; 2. To coordinate, cooperate and work with government and non-government agencies and entities in the promotion and delivery of services to the community; 3. To support and assist national development programs through the extension of financial, technical and other relevant assistance; 4. To encourage the members and the community to undertake the proper and efficient utilization of local resources in development activities; DaScAI 5. To acquire loans and other financial accommodations from the government and other financial institutions in order to finance productive socio-economic activities; 6. To receive grants, donation, contributions, legacies and other forms of financial assistance in order to carry out its primary purposes satisfactorily and effectively; 7. To enter into lawful contracts that may be necessary or incidental to the conduct of its business." The incorporators of subject corporation are as follows: Name Declared Tax Identification Number (1) Nova Kay B. Dulay 257-654-935-000 (2) Magdalena D. Liboon 149-082-806-000 (3) Cristina Cario 257-665-099-000 (4) Julia D. Nava 250-662-752-000 (5) Silverio L. Penoy 119-611-612-000 Its principal office is located at B80 L11 Bernardo Carpio St., Lagro, Quezon City, as indicated in its 2013 General Information Sheet, executed under oath by its corporate secretary, Ma. Carmel Bolozos on March 20, 2013. As part of their surveillance and investigation functions, EIPD of this Commission requested the Bureau of Internal Revenue ("BIR") for verification of the authenticity of the Tax Identification Numbers ("TINs") of the incorporators of subject corporation, as declared in its articles of incorporation. In a letter-certification dated February 6, 2014, the BIR, through Comm. Kim S. Jacinto-Henares, confirmed that the TIN used by/for incorporator, Julia D. Nava, is invalid. Acting on the matter, CRMD sent summons to subject corporation in its reported principal office address, copies furnished its president, Mary Arlene Baltazar, and incorporator, Julia D. Nava, directing the same to file its answer or comment to the information gathered by EIPD within fifteen (15) days from receipt thereof. The records of this Commission show that copies of summons were received by Mary Arlene Baltazar, and Julia D. Nava, respectively. It was found, however, that after a diligent effort subject corporation cannot be found in its reported principal office address. After the lapse of the reglementary period given to subject corporation, through its president, the summons remained unheeded despite due notice. TIEHDC On the other hand, Julia D. Nava filed her answer/comment, stating under oath that she and her four (4) co-incorporators have no personal knowledge about the incorporation of subject corporation. She stressed that the signatures appearing as those of the incorporators in the articles of incorporation are all forgeries. According to her, the declared TINs for Nova Kay B. Dulay (Batal), Cristina Cario and herself are all fabricated considering that they have not actually applied any with the BIR. While the declared TINs for Magdalena D. Liboon and Silverio L. Penoy are true, said persons did not give their consent to the use thereof for the purpose of incorporating subject corporation. In support of her representation, she submitted copies of the affidavits of her co-incorporators to ultimately prove that they are no way connected with subject corporation as incorporators or in any capacity. Hence, the instant case. The sole issue to be resolved is: "Whether or not this Commission should revoke the corporate registration of TANGLAW PARA SA MAGSASAKA FOUNDATION, INC. with SEC Registration No. CN200806076 on the ground of fraud in procuring its certificate of incorporation." The answer is in the affirmative. Discussions Incorporation is a mere privilege granted by the state, not a matter of right. Thus, in order to enjoy such privilege, the requirements and procedures for the grant thereof must be strictly complied with. One of such requirements is provided under Section 10 of the Corporation Code, to wit: "Any number of natural persons not less than five (5) but not more than fifteen (15), all of legal age and a majority of whom are residents of the Philippines, may form a private corporation for any lawful purpose or purposes. Each of the incorporators of a stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation." TEDaAc To prove the intention of the incorporators of forming a corporation, the statutory requirement is for them to specify their names, to sign the articles of incorporation and to acknowledge the same before a notary public. Section 14 of the same Code thus states: "All corporations organized under this code shall file with the Securities and Exchange Commission articles of incorporation in any of the official languages duly signed and acknowledged by all of the incorporators, containing substantially the following matters, except as otherwise prescribed by this Code or by special law: . . ." To prove further that the incorporators are indeed natural persons, they are required by the state to indicate their tax identification numbers in the articles of incorporation pursuant to Section 236 of the National Internal Revenue Code, which provides that: ". . . (J) Supplying of Taxpayer Identification Number (TIN). Any person required under the authority of this Code to make, render or file a return, statement or other document shall be supplied with or assigned a Taxpayer Identification Number (TIN) which he shall indicate in such return, statement or document filed with the Bureau of Internal Revenue for his proper identification for tax purposes, and which he shall indicate in certain documents, such as, but not limited to the following: . . . (5) Documents to be registered with the Securities and Exchange Commission ; Only one Taxpayer Identification Number (TIN) shall be assigned to a taxpayer. Any person who shall secure more than one Taxpayer Identification Number shall be criminally liable under the provision of Section 275 on Violation of Other Provisions of this Code or Regulations in General." It cannot be gainsaid that the articles of incorporation is the basic corporate contract which is accorded with reverence by the law and the courts, as manifested by the stringent rules for its registration. Once found to be compliant with the registration requirements, the state, through this Commission, shall grant its approval to the incorporation of a corporation. However, it must not likewise pass unstressed that any provision contained in the articles of incorporation which turns out to be fictitious shall cause the state to revoke its approval to the incorporation of said corporation. HCIaDT It is undisputed that all of the named incorporators namely, Nova Kay B. Dulay, Magdalena D. Liboon, Cristina Cario, Silverio L. Penoy and Julia D. Nava, expressed their non-participation in whatever capacity in the incorporation of subject corporation. They are neither signatory to the articles of incorporation nor have authorized anyone to sign the same on their behalf and use their individual information ( e.g. , TIN). In short, they are not incorporators contrary to what has been misrepresented therein. The misrepresentation is bolstered by the fact that the letter-certification from BIR, confirming that TIN 250-662-752-000 which was declared in subject corporation's articles of incorporation as that of Julia D. Nava is invalid. The misrepresentation in the articles of incorporation in effect renders the same non-compliant with the mandatory requirements of Sections 10 and 14 of the Corporation Code. Subject corporation had no genuine incorporators to speak of. To conceal the irregularity from this Commission, it used the names, addresses and tax identification numbers of Mr. Penoy, Mses. Dulay, Liboon, Cario and Nava without their consent. In the case of Ms. Nava, it provided her a fictitious tax identification number. Through its unscrupulous actions, it was able to secure the approval of the Commission for its incorporation. Such fraudulent act cannot be countenanced. Under Section 5.1 (a) of the Securities Regulation Code, the Commission is vested with authority to revoke the certificate of registration of corporation for any valid ground provided by the law, thus. "The Commission shall act with transparency and shall have the powers and functions provided by this code, PresidentialDecreeNo.902-A , the CorporationCode, the InvestmentHouseslaw, the FinancingCompanyAct and other existing laws. Pursuant thereto the Commission shall have, among others, the following powers and functions: . . . SCHcaT (m) Suspend, or revoke, after proper notice or hearing the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law;" (Underline ours.) Section 6, par. l, of Presidential Decree No. 902-A, as amended, enumerates "fraud in procurement of the certificate of registration" as one of these grounds for revocation. This "fraud" refers to fraud attendant in the registration and the same must be contained or connected with the documents and/or papers presented to the Commission for the registration of said corporation, partnership or association. 1 Fraud indubitably exists in the procurement of the certificate of registration of subject corporation, therefore, the revocation of its certificate of registration is inevitable and proper. WHEREFORE, premises considered, the Certificate of Registration of TANGLAW PARA SA MAGSASAKA FOUNDATION, INC., registered on April 23, 2008 under SEC Registration No. CN200806076, is hereby REVOKED. Let a copy of this Order be attached by the Corporate Filing and Records Division (CFRD) of this Department to the corporate records of subject corporation on file with this Commission and its "revoked" status be entered in the SEC online database by the Information and Communications Technology Department (ICTD) of this Commission. SO ORDERED. Mandaluyong City, Philippines. June 11, 2014. (SGD.) FERDINAND B. SALES Director Footnotes 1. In the Matter of Charyn Marketing Enterprise Corporation (SEC Case No. 03-05-49).