G.R. No. 262484 - ABACUS COAL EXPLORATION AND DEVELOPMENT CORPORATION, VS. SECURITIES AND EXCHANGE COMMISSION.

Ruling

WHEREFORE , the premises considered, the instant appeal is hereby DENIED for lack of merit. The Order of the CRMD dated [January 19,] 2011 is hereby AFFIRMED with MODIFICATION as to imposable penalty. Appellant is now hereby ordered to pay the fine of [PHP 1 million] per year of misstatement, or a total of [PHP 2 million], pursuant to Section 54.1(ii) of Republic Act No. 8799, otherwise known as the Securities Regulation Code (SRC), for the material deficiencies and material misstatements in its 2008 and 2009 Audited Financial Statements. The Appellant is hereby ordered to correct its 2008 and 2009 Audited Financial Statements to reflect the total misstatements of asset and equity amounting to [PHP 2.7 billion]. Further, the CRMD-FAAD is hereby directed to investigate the misstatements carried forward to succeeding audited financial statements and if necessary impose additional penalties until such are corrected. SO ORDERED . [16] (Emphasis in the original) According to the SEC En Banc , the disclosures made by Abacus Coal in its Notes to the AFS are incomplete or deficient not only for the missing amounts or values, but also for failure to make a clear connection to the Deed of Assignment of Mining Rights executed by ACRH in exchange for Abacus Coal's shares of stock worth PHP 295 million. [17] As regards material misstatement, the SEC En Banc pointed out that Abacus Coal's failure to record the issuance of the capital stock in exchange for the mining rights despite's SEC's approval of the increase in its authorized capital stock in 2008, resulted in the understatement of its Stockholder's Equity. [18] While it properly expensed the exploration costs of the mineral resources, Abacus Coal failed to capitalize or recognize the corresponding intangible asset or the mining rights itself that eventually resulted in the understatement of its Total Assets a misstatement of PHP 295 million each in its 2008 and 2009 AFS. [19] Finally, as to the supposed conflict between accounting standards covering exploration for and evaluation of mineral resources, the SEC En Banc found the same to be irrelevant as the SEC already approved Abacus Coal's increase of authorized capital stock in 2008 before the issuance of its AFS thus, the values of the mining rights and shares issued to ACRH were readily available for reporting. By failing to report the same, Abacus Coal disregarded the approved increase when it did not recognize the value of the mining rights as an asset and the value of the shares issued in exchange for the mining rights as an equity. [20] Aggrieved, Abacus Coal elevated its case before the CA. The Ruling of the CA The CA denied the appeal of Abacus Coal for lack of merit. The dispositive portion of the assailed Decision reads: WHEREFORE , premises considered, the instant petition is DENIED . The Decision[,] dated [July 16, 2019][,] of the Securities and Exchange Commission in the case docketed as SEC En Banc Case No. 02-11-230 is AFFIRMED in toto