Dir. Benedicto C. Acierto

June 6, 1994 Dir. Benedicto C. Acierto Cooperative Development Authority Pampanga Extension Office 2nd Flr.,Sales Bldg.,San Matias, Sto. Tomas, Pampanga S i r : This refers to your letter of May 19, 1994 requesting information on SEC guidelines or policies regarding suspension, cancellation or revocation of erring corporations. cdll The authority of the SEC to suspend, cancel or revoke corporations emanates from the following provisions of law: CORPORATION CODE : "SECTION 121. Involuntary dissolution . A corporation may be dissolved by the Securities and Exchange Commission upon filing of a verified complaint and after proper notice and hearing on grounds provided by existing laws, rules and regulations ." (Emphasis supplied) "SECTION 144. Violations of the Code . Violations of any of the provisions of this Code or its amendments not otherwise specifically penalized therein shall be punishable by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00) pesos or by imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the discretion of the court. If the violation is committed by a corporation, the same may, after notice and hearing, be dissolved in appropriate proceedings before the Securities and Exchange Commission ; Provided, That such dissolution shall not preclude the institution of appropriate action against the director, trustee or officer of the corporation responsible for said violation: Provided further, That nothing in this section shall be construed to repeal the other causes for dissolution of a corporation provided in this Code." (Emphasis supplied) P.D. 902-A AS AMENDED : "SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers: xxx xxx xxx 1) 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 : 1. Fraud in procuring its certificate of registration; 2. Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public; 3. Refusal to comply or defiance of any lawful order of the Commission restraining commission of acts which would amount to grave violation of its franchise; 4. Continuous in operation for a period of at least five (5) years; 5. Failure to file by-laws within the required period; 6. Failure to file required reports in appropriate forms as determined by the Commission within the prescribed period. ....(Emphasis supplied) The aforecited provisions require that suspension, cancellation or revocation of corporate franchise or registration can be effected by the SEC only on grounds provided by law and only after proper notice and hearing. In conducting hearings and investigations, the Commission is not strictly bound by the technical rules on procedure under the Rules of Court, except in those matters wherein it is expressly provided that the pertinent Rules of Court shall apply. Hearing on suspension, cancellation or revocation of corporate franchise or registration shall be conducted by the body, board, committee or officer as may be created or designated by the Commission for the purpose. prcd Please be advised accordingly. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner