CA upholds SEC decision to revoke Kapa’s certificate of incorporation
THE Court of appeals (Ca) has upheld the order of the securities and Exchange Commission (SEC) to revoke the certificate of incorporation of Kapacommunity 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 acquired exclusive jurisdiction over the petition for the revocation of Kapa’s incorporation papers, heard the petition with due process and rendered the decision on solid ground and substantial evidence.
The SEC 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 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 sec’s finding that the supposed solicitation of donations by Kapa constituted a public offering of securities in the form of investment contracts.
as such, Kapa should have registered the investment contracts with the SEC and secured the corresponding permit to offer securities to the public, as required by the securities Regulation Code.
“pastor apolinario cannot deny that Kapa is engaged in any solicitation or investment scheme,” the Ca said.
“in one of the investigations of [the SEC], several platforms were used by [Kapa] in social media with pastor apolinario excessively talking about Kapa’s investment scheme and how to earn profits from it.”
The appellate court also 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.
The TRO, issued on March 19, 2019, has asked the SEC from implementing the cease and desist order issued against Kapa on February 14, 2019.
The Ca held that the issuance of the TRO lacked legal basis, as this interfered with the sec’s exercise of powers and duties.
The Ca also 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 cease and desist order 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-percent return of profits every month,” the court said.
Following the revocation of its corporate registration, government forces arrested Kapa founder and president Joel a. apolinario in lingig, surigao del sur on July 21, 2020.