DOJ summons CAP, SEC officials to hearing

The Department of Justice (DOJ) has summoned the directors of College Assurance Plans Phils. Inc. (CAP) to a hearing on Oct. 11 to afford them the opportunity to explain the charges hurled against them by the Securities and Exchange Commission (SEC).

Also asked to appear before the DOJ are SEC officials. It will be recalled that the SEC last month lodged a criminal complaint before the DOJ against directors and officers of CAP for unauthorized sale of pre-need plans in violation of the Securities Regulation Code.

CAP said the complaint was intended to harass and malign them as it insisted that it has been in faithful compliance with the rules governing the sale of pre-need plans.

According to the SEC, CAP sold pre-need educational plans despite the fact that it knew it had no more registered plans to sell in violation of Section 16 of the SRC. CAP had used up all its registered plans as early as June 2004.

The SEC claimed that proceeds from the sale of these unregistered plans were co-mingled with the payments made by the old planholders.

In its complaint, the SEC recommended criminal prosecution of the pre-need firm’s board of directors, including CAP chairman Alejandro Roces, CAP president and chief executive officer Enrique Sobrepeña Jr., CAP treasurer James Marsh Thomson and CAP directors Coronado Munasque, Sen. Juan Flavier, Ernesto Espaldon, Robert John Sobrepeña Jr., William Russell Sobrepeña, Romulo Espaldon, Gillian Akiko Thomson, Eusebio Tanco, Rafael Evangelista and Ma. Romela Bengzon.

The SEC also sought the issuance of a hold-departure order against the respondents to prevent them from fleeing the country and evading criminal liabilities.

According to the SEC, directors of corporations occupy a reasonable and important business relation to the general public. "In accepting such position of trust and responsibility, it is not only presumed but expected of them, that they deal with the corporate property and conduct the business of the corporation with prudence and good faith. Being responsible for the management of the corporation, the directors had the obligation and the legal duty, therefore, to ensure that the corporation was operating within the bounds of the law," the SEC further said.

The SEC said the members of the board along with the responsible officers are liable under Section 73 of the SRC which states: "If the offender is a corporation, the penalty may at the discretion of the court be imposed upon such juridical entity and upon the officer or officers of the corporation."

Any person who violates the rules of the SEC may suffer a fine of not less than P50,000 nor more than P5 million or imprisonment of not less than seven years nor more than 21 years or both at the discretion of the court. <