GR 199028; (November, 2014) (Digest)
G.R. No. 199028 November 12, 2014
COSMOS BOTTLING CORPORATION, Petitioner, vs. COMMISSION EN BANC of the SECURITIES AND EXCHANGE COMMISSION (SEC) and JUSTINA F. CALLANGAN, in her capacity as Director of the Corporation Finance Department of the SEC, Respondents.
FACTS
Petitioner Cosmos Bottling Corporation failed to submit its 2005 Annual Report to the SEC within the prescribed period. The SEC-Corporation Finance Department (SEC-CFD), through respondent Director Justina F. Callangan, denied Cosmos’s request for an extension and ordered it to show cause why its Registration of Securities/Permit to Sell Securities to the Public should not be revoked for violating the Securities Regulation Code. After hearings, the SEC-CFD issued an Order dated May 8, 2007, suspending the permit for 60 days, warning that failure to submit the report would lead to revocation proceedings. Cosmos failed to comply, and revocation proceedings commenced. Cosmos eventually submitted its 2005 and 2006 Annual Reports on October 31, 2007, and requested the lifting of the suspension and abandonment of the revocation proceedings. The SEC En Banc, in a meeting, resolved to deny the request and revoke the permit via Resolution No. 87, s. 2008. Based on this, the SEC-CFD issued an Order of Revocation dated March 19, 2008. Cosmos appealed this Revocation Order to the SEC En Banc. The SEC En Banc dismissed the appeal, treating it as a prohibited motion for reconsideration of its own resolution, and deemed the Revocation Order final. The Court of Appeals affirmed this dismissal. Cosmos elevated the case to the Supreme Court.
ISSUE
Whether the Court of Appeals correctly treated Cosmos’s appeal before the SEC En Banc as a motion for reconsideration, and consequently affirmed its dismissal for being a prohibited pleading under the 2006 SEC Rules of Procedure.
RULING
No. The Supreme Court granted the petition. It ruled that the Revocation Order was issued by the SEC-CFD as an operating department of the SEC, not by the SEC En Banc itself. This was evidenced by: (a) it was printed on SEC-CFD letterhead; (b) it was docketed as “SEC-CFD Order No. 027, s. 2008”; and (c) it was signed solely by Director Callangan. The SEC-CFD’s referral to the SEC En Banc was an internal procedure, and Cosmos was not furnished a copy of Resolution No. 87, s. 2008, nor was it referenced in the Revocation Order. Therefore, Cosmos rightly believed the order was appealable to the SEC En Banc under Section 11-1, Rule XI of the 2006 SEC Rules of Procedure. Dismissing its appeal denied Cosmos its right to appeal. The Supreme Court set aside the CA’s decision and resolution and remanded the case to the SEC En Banc for resolution of Cosmos’s appeal on the merits.