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CA affirms SEC revocation of KAPA’s corporate registration

 

 

 

THE Court of Appeals (CA) has upheld the order of the Securities and Exchange Commission (SEC) revoking the certificate of incorporation of Kapa-Community Ministry International for its fraudulent investment-taking activities.

In an 18-page decision dated March 11, the CA Special 16th Division held that the SEC validly acquired exclusive jurisdiction over the petition for the revocation of KAPA’s incorporation, heard the petition with due process and subsequently rendered the assailed decision upon solid ground and substantial evidence.

The Commission En Banc issued the order of revocation on April 3, 2019 after finding that KAPA had offered and sold securities in the form of investment contracts and in the guise of donations, without the necessary license from the SEC and in a manner resembling a Ponzi scheme.

Under Section 6 (i)(2) of Presidential Decree No. 902-A, the SEC can revoke an entity’s certificate of incorporation on the ground of “serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public.”

“The [SEC] has established by substantial evidence that [KAPA] was engaged in an unlawful investment activity,” the CA ruled, affirming the Commission’s finding that the supposed solicitation of donations by KAPA actually constituted a public offering of securities in the form of investment contracts.

As such, KAPA must have registered the investment contracts with the SEC and secured the corresponding permit to offer securities to the public, pursuant to Republic Act No. 8799, or the Securities Regulation Code.

“Pastor Apolinario cannot deny that KAPA is engaged in any solicitation or investment scheme,” the CA noted. “In one of the investigations of [the SEC], several platforms were used by [KAPA] in social media with Pasto Apolinario excessively talking about KAPA’s investment scheme and how to earn profits from it.”

Accordingly, the appellate court maintained that the revocation of KAPA’s certificate of incorporation was justified.

The CA dismissed KAPA’s claim that the SEC defied the temporary restraining order (TRO) from the Regional Trial Court of General Santos City, Branch 35 when it issued the order of revocation while the TRO was in force.

Issued on March 19, 2019, the TRO enjoined the SEC from implementing the cease and desist order (CDO) issued against KAPA earlier on February 14, 2019.

The CA held that the issuance of the TRO lacked legal basis, as this interfered with the Commission’s exercise of powers and duties.

Section 179 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines, states that no court below the CA shall have jurisdiction to issue a restraining order that directly or indirectly interferes with the exercise of the powers, duties, and responsibilities of the SEC that falls exclusively within its jurisdiction.

Further, the CA junked KAPA’s claim that the SEC violated its right to due process when it failed to consider the letters it sent prior to the implementation of the revocation order, and when it declared the CDO permanent without hearing KAPA’s side.

“It must be stressed that the SEC decision was not rendered merely to terminate the existence of petitioner as a religious institution but because it committed serious acts of misrepresentation to the prejudice of the general public by soliciting investments in the guise of a donation with a promise of a 30% return of profits every month,” the appellate court noted.

Following the revocation of its corporate registration, the combined forces of the National Coordinating Agency, Philippine National Police, Philippine Army and Philippine Coast Guard arrested KAPA Founder and President Joel A. Apolinario in Lingig, Surigao del Sur on July 21, 2020.

In March 2020, Apolinario was again ordered arrested based on an arrest warrant from the Cagayan de Oro City Regional Trial Court for the non-bailable offense of syndicated estafa.

Other respondents include Junnie G. Apolinario, Maria Pella B. Sevilla, Cristobal R. Barabad, Nonita S. Urbano, Nelia V. Nino, Jouelyn A. Del Castillo, Joji A. Jusay and Albert P. Buhangbuhang.

The Bislig City Regional Trial Court Branch 29 earlier issued warrants of arrest against Apolinario, together with KAPA Corporate Secretary Reyna L. Apolinario, Trustee Margie A. Danao and promoters Reniones D. Catubigan, Marisol S. Diaz, Adelfa Fernandico and Moises Mopia, for violations of the SRC.

The Department of Justice (DOJ) has since charged KAPA, Mr. and Mrs. Apolinario, and Danao of violations of Sections 8(8.1), 26.1, and 28 of the SRC for promoting the investment scam.

The DOJ further charged Diaz before the Antipolo Regional Trial Court for violation of Section 28 of the SRC. It filed similar charges against Mopia and Fernandico with the Quezon City Regional Trial Court Branch 93, which then issued Warrants of Arrest against the respondents on December 2, 2019. Both cases are ongoing trial. PR

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