G.R. No. 181381 ; July 20, 2015
SECURITIES and EXCHANGE COMMISSION, Petitioner, vs. UNIVERSAL RIGHTFIELD PROPERTY HOLDINGS, INC., Respondent.

FACTS

Respondent Universal Rightfield Property Holdings, Inc. (URPHI) is a registered corporation. On May 29, 2003, the Securities and Exchange Commission (SEC) revoked URPHI’s Registration of Securities and Permit to Sell Securities to the Public for failure to timely file its Year 2001 Annual Report and Year 2002 quarterly reports under the Securities Regulation Code (SRC). URPHI later complied, and the SEC lifted the revocation on October 24, 2003, upon URPHI’s payment of a reduced fine. URPHI subsequently failed again to submit its 2003 Annual Report and 2004 1st Quarter Report. After a hearing on July 6, 2004, where URPHI explained its delays were due to staff reduction and audit delays, the SEC suspended its registration for 60 days via an Order dated July 27, 2004, warning that revocation would follow for persistent non-compliance. URPHI again failed to submit reports and requested a final extension until November 15, 2004. It filed its 2003 Annual Report on December 1, 2004, and its 2004 quarterly reports on December 9, 10, and 14, 2004. However, on December 8, 2004, the SEC issued an Order revoking URPHI’s registration for failure to comply within the extension period. URPHI appealed, but the SEC denied the appeal in a Resolution dated December 15, 2005. URPHI then filed a petition for review with the Court of Appeals.

ISSUE

Whether the Court of Appeals erred in setting aside the SEC’s Order of Revocation on the ground that URPHI was not afforded due process, specifically, prior notice and hearing before the revocation of its registration of securities and permit to sell them to the public.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals. The Court held that URPHI was not afforded due process before the revocation of its registration. Section 13.1 of the Securities Regulation Code explicitly requires that revocation of a registration statement must be “after due notice and hearing.” The hearing conducted on July 6, 2004 was specifically for the purpose of determining whether URPHI’s registration should be suspended, as stated in the Notice of Hearing dated June 25, 2004. The Court ruled that suspension and revocation are distinct administrative sanctions, and the statutory requirement of a hearing for revocation cannot be satisfied by a hearing held for suspension. The SEC’s Order of Suspension dated July 27, 2004, while warning of possible revocation, did not constitute the “due notice” required by law for a revocation proceeding. No separate notice and hearing were conducted specifically for the revocation of URPHI’s registration before the Order of Revocation was issued on December 8, 2004. The Court emphasized that the specific mandate of Section 13.1 of the SRC controls, and the doctrine that administrative due process can be satisfied by a later opportunity to be heard (e.g., through a motion for reconsideration) must yield when the statute itself expressly demands prior notice and hearing. Therefore, the revocation order was issued in violation of URPHI’s right to due process.