SECOND DIVISION
|
PHILIPPINE VETERANS BANK, Petitioner, - versus - JUSTINA CALLANGAN, in her
capacity as Director of the Corporation Finance Department of the Securities
and Exchange Commission and/or the SECURITIES AND EXCHANGE COMMISSION, Respondent. |
G.R.
No. 191995
Present: CARPIO, J.,
Chairperson, LEONARDO-DE CASTRO,*
BRION, PEREZ, and SERENO, JJ. Promulgated: August 3,
2011 |
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RESOLUTION
BRION, J.:
We
resolve the motion for reconsideration[1]
filed by petitioner Philippine Veterans Bank (the Bank) dated August 5, 2010, addressing our June 16, 2010 Resolution
that denied the Banks petition for review on certiorari.
Factual Antecedents
On
March 17, 2004, respondent Justina F. Callangan, the Director of the
Corporation Finance Department of the Securities and Exchange Commission (SEC), sent the Bank a letter, informing
it that it qualifies as a public company under Section 17.2 of the Securities
Regulation Code (SRC) in relation with
Rule 3(1)(m) of the Amended Implementing Rules and Regulations of the SRC. The
Bank is thus required to comply with the reportorial requirements set forth in
Section 17.1 of the SRC.[2]
The Bank responded by explaining that
it should not be considered a public company because it is a private company
whose shares of stock are available only to a limited class or sector, i.e., to World War II veterans, and not
to the general public.[3]
In a letter dated April 20, 2004,
Director Callangan rejected the Banks explanation and assessed it a total
penalty of One Million Nine Hundred Thirty-Seven Thousand Two Hundred Sixty-Two
and 80/100 Pesos (P1,937,262.80) for failing to comply with the SRC
reportorial requirements from 2001 to 2003. The Bank moved for the
reconsideration of the assessment, but
Director Callangan denied the motion in SEC-CFD Order No. 085, Series of 2005
dated July 26, 2005.[4]
When the SEC En Banc also dismissed
the Banks appeal for lack of merit in its Order dated August 31, 2006, prompting
the Bank to file a petition for review with the Court of Appeals (CA).[5]
On March 6, 2008, the CA dismissed
the petition and affirmed the assailed SEC ruling, with the modification that
the assessment of the penalty be recomputed from May 31, 2004.[6]
The
CA also denied the Banks motion for reconsideration,[7] opening
the way for the Banks petition for review on certiorari filed with this Court.[8]
On
June 16, 2010, the Court denied the Banks petition for failure to show any
reversible error in the assailed CA decision and resolution.[9]
The Motion for Reconsideration
The Bank reiterates that it is not a
public company subject to the reportorial requirements under Section 17.1 of
the SRC because its shares can be owned only by a specific group of people,
namely, World War II veterans and their widows, orphans and compulsory heirs,
and is not open to the investing public in general. The Bank also asks the
Court to take into consideration the financial impact to the cause of
veteranism; compliance with the reportorial requirements under the SRC, if
the Bank would be considered a public company, would compel the Bank to spend
approximately P40 million just to reproduce and mail the Information
Statement to its 400,000 shareholders nationwide.
The Courts Ruling
We
DENY the motion for reconsideration for lack of merit.
To determine whether the Bank is a
public company burdened with the reportorial requirements ordered by the SEC,
we look to Subsections 17.1 and 17.2 of the SRC, which provide:
Section 17.
Periodic and Other Reports of Issuers.
17.1. Every issuer
satisfying the requirements in Subsection 17.2 hereof shall file with the
Commission:
a) Within one hundred thirty-five (135) days,
after the end of the issuers fiscal year, or such other time as the Commission
may prescribe, an annual report which shall include, among others, a balance
sheet, profit and loss statement and statement of cash flows, for such last
fiscal year, certified by an independent certified public accountant, and a
management discussion and analysis of results of operations; and
b) Such other
periodical reports for interim fiscal periods and current reports on
significant developments of the issuer as the Commission may prescribe as
necessary to keep current information on the operation of the business and
financial condition of the issuer.
17.2. The
reportorial requirements of Subsection 17.1 shall apply to the following:
x x x x
c) An issuer with assets
of at least Fifty million pesos (P50,000,000.00) or such other
amount as the Commission shall prescribe, and having two hundred (200) or
more holders each holding at least one hundred (100) shares of a class of its
equity securities: Provided, however, That the obligation of such issuer to
file reports shall be terminated ninety (90) days after notification to the
Commission by the issuer that the number of its holders holding at least one
hundred (100) shares is reduced to less than one hundred (100). (emphases supplied)
We also cite Rule 3(1)(m) of the Amended Implementing Rules and
Regulations of the SRC, which defines a public company as any corporation
with a class of equity securities listed on an Exchange or with assets
in excess of Fifty Million Pesos (P50,000,000.00) and having two
hundred (200) or more holders, at least two hundred (200) of which are
holding at least one hundred (100) shares of a class of its equity
securities.
From these provisions, it is clear that a public company, as contemplated
by the SRC, is not limited to a company whose shares of stock are publicly
listed; even companies like the Bank, whose shares are offered only to a
specific group of people, are considered a public company, provided they meet
the requirements enumerated above.
The records establish, and the Bank does not dispute, that the Bank has
assets exceeding P50,000,000.00 and has 395,998 shareholders.[10] It is thus considered a public company that must
comply with the reportorial requirements set forth in Section 17.1 of the SRC.
The Bank also argues that even assuming it is
considered a public company pursuant to Section 17 of the SRC, the Court
should interpret the pertinent SRC provisions in such a way that no financial
prejudice is done to the thousands of veterans who are stockholders of the
Bank. Given that the legislature intended the SRC to apply only to publicly
traded companies, the Court should exempt the Bank from complying with the
reportorial requirements.
On this point, the Bank is apparently referring
to the obligation set forth in Subsections 17.5 and 17.6 of the SRC, which
provide:
Section
17.5. Every issuer which has a class of
equity securities satisfying any of the requirements in Subsection 17.2 shall furnish
to each holder of such equity security an annual report in such form and
containing such information as the Commission shall prescribe.
Section 17.6. Within such period as the
Commission may prescribe preceding the annual meeting of the holders of any
equity security of a class entitled to vote at such meeting, the issuer shall
transmit to such holders an annual report in conformity with Subsection 17.5. (emphases supplied)
In making this argument, the Bank ignores the
fact that the first and
fundamental duty of the Court is to apply the law.[11] Construction
and interpretation come only after a demonstration that the application of the
law is impossible or inadequate unless interpretation is resorted to.[12]
In this case, we see the law to be very clear and free from any doubt or ambiguity;
thus, no room exists for construction or interpretation.
Additionally, and contrary to the Banks claim,
the Banks obligation to provide its stockholders with copies of its annual
report is actually for the benefit of the veterans-stockholders, as it gives
these stockholders access to information on the Banks financial status and
operations, resulting in greater transparency on the part of the Bank. While
compliance with this requirement will undoubtedly cost the Bank money, the
benefit provided to the shareholders clearly outweighs the expense. For many
stockholders, these annual reports are the only means of keeping in touch with
the state of health of their investments; to them, these are invaluable and
continuing links with the Bank that immeasurably contribute to the transparency
in public companies that the law envisions.
WHEREFORE,
premises considered,
petitioner Philippine Veterans Banks motion for reconsideration is hereby DENIED with finality.
SO ORDERED.
ARTURO
D. BRION
Associate
Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate
Justice
Chairperson
|
TERESITA J. LEONARDO-DE CASTRO Associate
Justice |
JOSE Associate
Justice |
MARIA
Associate
Justice
A T T E S T A T I O N
I attest that the conclusions in the above Resolution had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
ANTONIO
T. CARPIO
Associate
Justice
Chairperson,
Second Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution
and the Division Chairperson's Attestation, I certify that the conclusions in
the above Resolution had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
RENATO
C. CORONA
Chief
Justice
* Designated as Acting Member of the Second Division per Special Order No. 1006 dated June 10, 2011.
[1] Rollo, pp. 172-183.
[2]
[3] Ibid.
[4]
[5]
[6] Penned by Associate Justice Magdangal M. de Leon, and concurred in by Associate Justices Rebecca de Guia-Salvador and Ricardo R. Rosario; id. at 31-37.
[7]
[8]
[9]
[10]
[11] People v. Mapa, G.R. No. L-22301, August 30, 1967, 20 SCRA 11.
[12] Lizarraga Hermanos v.