SEC gives CBCPNet 10 days to give info on Internet venture

The Securities and Exchange Commission (SEC) has given the minority shareholders of CBCPNet an additional 10-day period to submit material information on the failed Internet venture’s financial operations before the corporate watchdog takes over the firm’s management.

SEC commissioner Jesus Martinez said the lack of an audit report and financial statement of CBCPNet would hinder the planned take over, especially as it concerns the identification and orderly disposal of its assets and the setting of its obligations to creditors.

"Although the SEC can moto propio form a management committee, the petitioner had made certain allegations that need to be substantiated especially with regard to the assets of CBCPNet," Martinez pointed out.

The SEC called for a hearing last Wednesday to discuss wtih CBCPNet’s minority shareholders – the Catholic Bishops Conference of the Philippines – and the firm’s creditors the petition to dissolve the company, which has gone bankrupt with around P119 million in debts owed to some 39 creditors.

The Church officials involved in the venture, former CBCP president Lingayen-Dagupan Archbishop Oscar Cruz, CBCP media director Rev. Pedro Quitorio III and Bataan Bishop Honesto Ongtioco, were represented by lawyer Manuel Orallo. The CBCP officials collectively control 45 percent of the company with the majority 55 percent held by twins Inc., owned by couples Eman and Mardie Lim.

"The parties apparently came to SEC on the basis of their belief that we have jurisdiction and that we can act faster than the regular courts," Martinez said. "The law, however, specifies the valid grounds for SEC to intervene in these situations and we have asked the parties to clarify certain inconsistencies in the petition so as to further solidify their basis for the prayer."

He added that the issue of the SEC taking jurisdiction over the petition and dissolution based on mismanagement is not one of such grounds specified in the law but stressed this could move from being a single case of mismanagement to one that involves public interest.

Martinez sasid the creation of a management committee in the interest of prot ecting creditors and stockholders should be premised on a real possibility of recovering credits and not purely a hypothetical one.

He told the bishops’ counsel to come foward with any information material to the case, specifically that which will show any endorsement or certification by the CBCP itself of any loans or transactions that CBCPNet may have entered into.

"This is because the creditors of CBCPnet based on unaudited financial reports are some of the largest telecom companies in the country which necessarily would have required contracts to be entered into prior to extending millions of pesos in credit. Board resolutions may have also been executed to allow these contracts. With these documents, SEC may be placed in a better position to help both the stockholders and creditors," Martinez said.

Under the law, while the SEC regulates all corporations, only the regular courts now have the sole authority to order their dissolution. CBCPNet has served the SEC notice of its plan to dissolve the company way back Jan. 30, 2002 but it was only two weeks ago that such plan came out in the open when the Church officials involved admitted that their business partners, the Lim cou ple, gypped them of about P190 million in the failed venture.

CBCPNet, founded in 1999, was forced to stop operations last year after the prelates learned of its massive debts, unaccounted for by the Lim couple who has since reportedly gone into hiding.