1. business and industrial
2. company
3. annual report

COVER SHEET
1 6 3 6 7 1
SEC Registration Number
P R I M E
O R I O N
P H I L I P P I N E S ,
I N C .
(Company’s Full Name)
2 0 / F
L K G
M A K A T I
T OW E R ,
6 8 0 1
A Y A L A
A V E .
C I T Y
(Business Address: No. Street City/Town/Province)
ATTY. DAISY L. PARKER
(Contact Person)
0 6
3 0
Month
Day
884-1106
(Company Telephone Number)
SEC Form
1 7 - A
(Form Type)
Month
(Fiscal Year)
Day
(Annual Meeting)
(Secondary License Type, If Applicable)
Dept. Requiring this Doc.
Amended Articles Number/Section
Total Amount of Borrowings
Total No. of Stockholders
Domestic
Foreign
To be accomplished by SEC Personnel concerned
File Number
LCU
Document ID
Cashier
STAMPS
Remarks: Please use BLACK ink for scanning purposes.
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-A, AS AMENDED
ANNUAL REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATION CODE AND SECTION 141
OF CORPORATION CODE OF THE PHILIPPINES
1. For the fiscal year ended
:
2. SEC Identification Number :
4. Exact name of registrant
:
30 June 2012
163671
3. BIR Tax Identification No.: 320-000-804-342
PRIME ORION PHILIPPINES, INC.
5. Mandaluyong, Philippines
Province, Country or other jurisdiction of
incorporation or organization
6.
(SEC Use Only)
Industry Classification Code:
7. 20/F LKG Tower, 6801 Ayala Avenue, Makati City
Address of principal office
8.
(632) 884-1106
Registrant's telephone number, including area code
9. N/A
Former name, former address, and former fiscal year, if changed since last report.
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the
RSA (As of 30 September 2012)
Title of Each Class
Common
Consolidated Loans Payable
Number of Shares of Common Stock
Outstanding and Amount of Debt Outstanding
2,366,444,383 shares
-0-
11. Are any or all of these securities listed on a Stock Exchange.
Yes [ X ]
No [ ]
If yes, state the name of such stock exchange and the classes of securities listed therein:
Philippine Stock Exchange
Common Shares
12. Check whether the registrant:
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1
thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder and Sections
26 and 141 of The Corporation Code of the Philippines during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports);
Yes [X]
No [ ]
(b) has been subject to such filing requirements for the past 90 days.
Yes [X]
No [ ]
13. Aggregate market value of the voting stock held by non-affiliates
(as of 30 Sept. 2012):
P780,787,503.16
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 2
PART I - BUSINESS AND GENERAL INFORMATION
Item 1. Business
A.
Business Development
Prime Orion Philippines, Inc. (POPI/Company/Issuer), originally registered as Philippine
Orion Properties, Inc., was incorporated in 1989 as an investment holding company. The
merger of the Company with First Lepanto Corporation (FLC) paved the way for the entry of
the Guoco Group of Hong Kong [through its affiliate, Guoco Assets (Philippines), Inc. (GAPI)]
as principal shareholder of the Company. Consequently, in 1994, the Company was renamed
Guoco Holdings (Philippines), Inc. (GHPI). (Guoco Group is a regional conglomerate with
operations in Singapore, Malaysia, Indonesia, Hong Kong and the United Kingdom, engaged
in the businesses of real estate, manufacturing and financial services).
On 2 October 2001, GAPI and GHPI mutually agreed to terminate their Management Contract
to enable GHPI to better position itself in the Philippines and capitalize on the local conditions
existing at that time. Consequently, on 4 January 2002, GHPI changed its name to Prime
Orion Philippines, Inc..
POPI, at present, has interests in real estate and property development, manufacturing and
retailing/distribution, financial services and other allied services organized under the following
intermediate holding companies:
(i)
(ii)
(iii)
(iv)
B.
(i)
Cyber Bay Corporation (formerly FLC), organized in 1989, with authority to carry
on the general business of dealing in real estate (including all improvements
found thereon);
Orion Land Inc., organized in 1996, with authority to purchase, own, hold, lease
and dispose of real properties;
Orion I Holdings Philippines, Inc., organized in 1993, with authority to engage in
the manufacture, importing, selling and dealing in wholesale of various products,
electronic equipment and materials/supplies used for the manufacture of said
products; and
OE Holdings, Inc., organized in 1993, with authority to engage in investment
holding activities.
Business of Issuer
Principal Products and Services
The principal products and services of POPI’s holding and operating companies as of 30
September 2012 are as follows:
Cyber Bay Corporation (CBC)
CBC, a 22.28%-owned affiliate of POPI, holds 100% interest in Central Bay
Reclamation and Development Corporation (CBRDC), the company tasked to reclaim
and develop some 750 hectares along the Manila Bay area earmarked for
development into a world-class integrated township to be called Cyber Bay City.
With the Supreme Court’s declaration with finality of the nullity of the Amended Joint
Venture Agreement (AJVA) between CBRDC and the Philippine Reclamation
Authority (PRA) (formerly Public Estates Authority) covering the said project, all
project development activities at the site have been suspended. On 10 August 2007,
CBC has filed a P10.2 billion claim with the PRA for reimbursement of all its
expenses for the project. To date, said claim is still pending with the PRA.
Orion Land Inc. (OLI)
•
Tutuban Properties, Inc. (TPI), a wholly-owned subsidiary, organized in 1990, holds
the lease and development rights over a 22-hectare market district in downtown
Divisoria, the country’s oldest and biggest trading district. On the property sits the
Tutuban Commercial Center, an integrated wholesale and retail complex
recognized as the premier shopper’s bargain district in the Philippines. On 22
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 3
December 2009, TPI renewed its Contract of Lease with the Philippine National
Railways (PNR) for another 25 years (5 September 2014 to 2039).
•
TPI Holdings Corporation (THC), organized in 2005 as a wholly-owned subsidiary of
TPI, holds the titles to certain parcels of land in Calamba, Laguna.
•
Orion Property Development, Inc. (OPDI), another wholly-owned subsidiary,
organized in 1993, handles property acquisition and horizontal development. Its
landholdings include: (i) a 33-hectare property in Sto. Tomas, Batangas (about 18
hectares of which have been sold and pending completion/transfer to a third party
buyer); (ii) 44-hectare raw land in Kay-Anlog, Laguna (of which 13 lots, with an
aggregate area of 119,282 sqm. have been transferred to the City Government of
Calamba on 12 April 2012); (iii) about 13 residential lots in The Homelands
Subdivision in Calamba, Laguna, with a total area of about 2,030 sqm.; (iv) Trellis
Pocket Centre, a 747-sqm. commercial project located along National Highway,
Calamba; (v) additional 7,442 sqm. property known as the MARFA area at the back
of The Homelands, intended to be developed and marketed as the premier section of
The Homelands Subdivision; and (vi) 639-sqm. property in J.P. Rizal, Makati City, to
be developed as a commercial/residential condominium.
Orion I Holdings Philippines, Inc. (OIHPI)
•
Lepanto Ceramics, Inc. (LCI), a wholly-owned subsidiary, is engaged in the
manufacture of ceramic floor and wall tiles under the brand name Lepanto.
OE Holdings, Inc. (OEHI)
•
Orion Maxis Inc. (OMI), a wholly-owned subsidiary of OEHI, is engaged in the
business of establishing, developing and providing management and logistical
infrastructure service and market incentive systems solutions, and other allied
businesses and services. Appointed as the sales and marketing arm of LCI in 2008,
OMI handles the distribution of Lepanto tiles.
In addition to tile distribution, OMI, through its OMI Land Title Services Division, offers
land titling services (such as title transfer, reconstitution of lost title, land verification
and survey, real property tax assessment and payment, etc.). [Incorporated in 2000
(as 22ban.com), OMI was intended to initially operate as an on-line shopping website
that offers a wide variety of gifts and other items for all occasions. In September
2004, OMI amended its primary purpose to its present purpose.]
Other subsidiaries/affiliates of POPI include:
•
FLT Prime Insurance Corporation (FPIC)
FPIC, a 70%-owned subsidiary of POPI, was incorporated in 1977, and operates as a
non-life insurance company. It offers wide range of insurance products/lines such as
fire, marine cargo, motor car, bonds, accident & health, miscellaneous casualty,
engineering and business care.
•
Orion Solutions, Inc. (OSI)
OSI, a 100%-owned subsidiary, is engaged in the business of providing business
software solutions and management/information technology (IT) consultancy services
to individuals and corporations. (It was originally organized in 1994 as an investment
holding company; however, in 2002, the company amended its purpose to providing
management, technical and financial consultancy services. It again amended its
purpose in 2005 to engage in business as a software solutions/IT consultancy
services firm.) OSI is the IT subsidiary of the POPI Group and is an authorized
Reseller in the Philippines of the Enterprise Retail Planning Software Solution, Epicor
9, which is focused on sales and distribution for wholesale and retail, finance and
discrete manufacturing.
•
BIB Aurora Insurance Brokers, Inc. (BAIBI)
BAIBI, organized in 1960, a 20%-owned affiliate, is in the business of insurance
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 4
brokering. Due to poor market conditions, BAIBI suspended its operations in 2002.
Based on the Company’s Consolidated Statement of Income (Loss) for the past year, the
contribution of the above subsidiaries (on a per type of business basis) to the Company’s
consolidated net income are as follows:
Parent Co. (holding co.)
Real estate & property development
Financial Services
Manufacturing
Total Income
(ii)
-
(5.03)%
76.38
99.07
(70.42)
-----------100.00%
=====
Percentage of Sales Contributed by Foreign Sales
The target market for products of the Company and its subsidiaries is the domestic market.
(iii)
Distribution Methods
Selling of real estate by OPDI is made either through: (i) direct selling to individual or
corporate buyers, or (ii) brokers. LCI’s Lepanto products are distributed and sold through
authorized distributors/dealers, consignees like Do-It-Yourself (DIY) stores, retail outlets and
tie-ups with architects, contractors and known developers.
Insurance products of FPIC are sold through direct selling or marketing by FPIC’s individual/
corporate agents, branches, brokers and partners.
OMI promotes its land titling services by joining trade fairs, direct advertising through
flyers/brochures and agreements with banks and developers.
(iv)
New Products or Services
LCI continues to launch new tile designs for both rustic and glossy tiles. FPIC continues to
develop new insurance products for its retail market/clients.
(v)
Competition
The Company competes with other investment holding companies in the Philippines in terms
of investment prospects.
The Company’s core businesses continue to compete in their respective industries. However,
competition is kept basically on a domestic level. The Company’s core businesses are as
follows:
1.
LCI - LCI competes in the ceramic tile manufacturing market. It faces competition
with the local brands as well as cheap-priced imported tiles. LCI has increased its
efforts to reduce its operating cost by lowering total production cost by using
alternative sources of raw materials and fuel, complemented by more efficient
production cycle times, lower wastages and rationalization in its organizational
structure. To remain competitive, LCI continues to introduce new product
lines/designs including rustic tile designs. To enable LCI to focus its efforts on tile
manufacturing, OMI works as the sales and marketing arm of LCI. To ensure visibility
and availability of its products, LCI operates a retail showroom at Tutuban Prime
Block Building; its products are also available at the DIY stores and home depots (like
MC Home Depot, Ace Hardware, Wilcon, Citihardware).
2.
TPI - TPI operates the Tutuban Center in Manila, known as the premier bargain
center in the country. Its competitors include other mall operators/lessors in the
Divisoria area and within Metro Manila. TPI’s Night Market and Food Street
operations continue to draw customer traffic.
TPI capitalizes on aggressive trimedia advertising and promotional campaigns to enhance customer awareness
about Tutuban Center. With the renewal of its lease, TPI will commence the
redevelopment of its existing buildings. TPI started redevelopment/refurbishment of
its Cluster Building (CB) in March 2012. However, on 4 September 2012, fire gutted
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 5
CB 1. TPI has already secured a property recovery and clearing permit for CB 1 and
CB 2. Meanwhile, TPI’s Centermall, Prime Block, Bonifacio Plaza, Robinson’s
Supermarket and Department Store, Food Street and Night Market continue their
normal business operations. TPI has renewed its accreditation as tourist destination
for its mall with the Department of Tourism. As a new offering, TPI has built a 41room Orion Hotel located at the third floor of Prime Block Building. The Orion Hotel, a
businessman hotel, caters to traders and shoppers of Tutuban Center.
3.
FPIC - FPIC competes with other non-life insurance companies. Aside from its head
office in Makati, FPIC maintains branches in Metro Manila, specifically, in Cubao,
Caloocan and Alabang, and key cities in the provinces of Cavite, Cebu, Bacolod,
Dagupan, Davao and Cagayan de Oro, to expand its customer base and improve its
market share. To remain competitive, FPIC continues to develop diverse and
customized products which cater to the unique needs of its target market- the retail
market, and to improve its existing products and services to its customers. There was
also increased focus on lines with high premium retention such as motor car,
personal accident and residential accounts.
4.
OMI- As for tile distribution, OMI competes with distributors of other tile
manufacturers and importers. OMI competes with other land title management
service providers.
(vi)
Purchases of Raw Materials and Supplies
The Company’s raw materials and supplies are purchased on a competitive basis from many
different sources and are readily available.
(vii)
Customers
POPI has a broad market base for its numerous product lines and is not dependent on a
single customer or group of customers.
For its real estate and property development operations, POPI’s potential customers include
middle to high-income home buyers as well as real estate investors and developers.
For its manufacturing operations, LCI’s ceramic tile products cater to the construction industry
(including the renovation market) and its variety of products appeal to medium-end and lowend consumers. OMI targets known project developers and contractors. For 2012, LCI
continued to focus on rustic ceramic tile designs which cater both to the low-end and highend markets.
For its financial services, FPIC has non-life insurance products which cater to a variety of
customers, individuals and corporations.
(viii)
Transactions with and/or Dependence on Related Parties
The Company has limited transactions and/or dependence on its shareholders and/or related
parties in view of existing laws on disclosure and/or requirement for prior approval of
appropriate government agencies.
(ix)
Franchise
The Company’s products are not covered by any franchise.
(x)
Government Approvals for Principal Services
The following subsidiary/affiliates of the Company have been granted the necessary
government approvals for their operations:
On 29 August 1980, BAIBI, a 20%-owned affiliate, was granted a license by the Insurance
Commission (IC) to operate as an insurance broker. BAIBI’s broking license has not been
renewed as it has not resumed operations.
On 9 March 1977, FPIC, a 70%-owned subsidiary, was also granted a license by the IC to
operate as a non-life insurance company, which license is renewed annually.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 6
(xi)
Effect of Existing or Probable Governmental Regulations
Governmental regulations expected to materially affect the operations or business of POPI
and certain of its subsidiaries are as follows:
a)
On LCI
(i)
On 11 April 2002, the Department of Trade and Industry (DTI), pursuant to Republic
Act No. (R.A.) 8800 (Safeguard Measures Act), issued a decision imposing a
definitive general safeguard duty on imported ceramic floor and wall tiles. The
safeguard measure was extended in 2004 and 2007; a final extension of this
definitive general safeguard measure for another four years was approved by DTI
as per its Order dated 21 January 2008. [Under R.A. 8800 and its Implementing
Rules, the effective period of the measure, including its extension, may not in the
aggregate exceed 10 years; any further petition for safeguard measure for the
same articles shall not be accepted within 2 years from expiration of the same.]
Unless RA 8800 is extended or a similar measure is passed, LCI and other local
ceramic tile manufacturers face stiff competition from imported ceramic tiles;
(ii) The implementation of the Bureau of Philippine Standards (BPS) product
certification will deter the flooding of the market with cheap substandard tile
products. Lepanto tiles received the BPS certification which confirms the quality of
LCI’s tile products; and
(iii) Industrial facilities using bunker fuel will have to comply with the guidelines of the
Department of Environment and Natural Resources (DENR) in connection with its
implementation of RA 8747 or the Philippine Clean Air Act of 1999. The DENR is
working on the guidelines for said industrial facilities particularly with respect to
mass rating, emission trading and emission averaging.
b)
On FPIC
On 10 November 2011, the Securities and Exchange Commission acknowledged FPIC’s
increase in paid-up capital to P175 million. Pursuant to Department of Finance Order No.
27-06, as amended by Department Order No. 15-2012, FPIC is required to increase its
paid-up capital to P250 million by 31 December 2012.
c) On TPI
Government approval on the proposed increase in the prices of electricity and water will
have a material adverse effect on the operations of TPI as it will directly increase utilities
and overhead expenses (including Common Usage Service Area expenses).
(xii)
Research and Development Activities
Except for the development of new tile designs by LCI, there are no other research and
development activities undertaken by the Company or its other subsidiaries. Budget for
research is included in tile production cost.
(xiii)
Costs and Effects of Compliance with Environmental Laws
Operations of its manufacturing company may be affected in the coming years with the
implementation of R.A. 8747 and other environmental laws. Compliance with such
environmental laws may entail additional investments and/or upgrades in facilities.
(xiv)
Employees
As of 30 June 2012, the employees of POPI are as follows:
Executives
Managers
Supervisors*
Rank & File
Total
-
8
6
11
11
------36
*performs various clerical and administrative functions
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 7
The said employees have been seconded by POPI to its subsidiaries. Depending on its
requirements and that of its subsidiaries, POPI may hire additional employees for the ensuing
fiscal year.
The Company has no workers’ unions and is not bound under any Collective Bargaining
Agreement (CBA); neither are any of its employees involved in any strike or threatening to
stage a strike against the Company.
However, the Company’s subsidiaries namely, FPIC and LCI, have workers’ unions which
have existing CBAs. LCI’s CBA was signed last 21 October 2009; re-negotiation of the
economic terms of the CBA began in October 2012. FPIC’s CBA was signed on 8 December
2010.
Item 2. Properties
The operations of the Company and most of its subsidiaries are conducted at the 20/F LKG
Tower, 6801 Ayala Avenue, Makati City. The Company and its subsidiaries lease said office
at the rate of P680.00 per sqm. (subject to annual escalation); the lease was recently
renewed for another three (3) years or until 14 April 2013, renewable under such terms
acceptable to the parties.
LCI’s office and ceramic tile manufacturing operations are conducted in a plant in LCI’s 14.28hectare property in Calamba, Laguna. TPI holds office at the 2nd Floor of Centermall Building
of Tutuban Center at C.M. Recto Ave., Manila. FPIC’s Head Office leases the 16th floor of
Pearlbank Centre located at 146 Valero St., Salcedo Village, Makati City, while its branches
lease office spaces in Alabang, Davao City, Bacolod, Dagupan, Caloocan, Cubao, Cagayan
de Oro, Cebu and Cavite.
Other properties of the Company and its subsidiaries include: (i) a 232.98 sqm. condominium
unit at Eurovilla III at Valero St., Makati City, which is presently used as the residence
of one of the Company’s officers; (ii) Tutuban Center (comprised of Prime Block Mall, Cluster
Buildings (CB), Centermall I and II, Robinsons’ Supermarket and Department Store building
and Parking Tower) with a total area of about 165,000 square meters. However, on 4
September 2012, fire gutted CB 1. At present, there are no operations at CB 1 and 2.
However, TPI has already secured the property recovery and clearing permit for CB 1 and CB
2. For its new offering, TPI has built a 41-room businessman hotel, the Orion Hotel, which is
expected to start operations within this year. The Tutuban Center sits on about 20 hectares
of real property owned by the PNR and presently leased by TPI. The said lease was renewed
last 22 December 2009 for another 25 years (5 September 2014 to 4 September 2039). The
Renewal of Contract of Lease (starting 2014) provides for an expanded leased area (land
use), which would include: (a) Phase I- existing 8.5 has.; (b) Phase IIA- approximately 5.8
has. (for land use); and (c) Phase IIB- approximately 5.8 has. (air rights); (iii) a 1.07 hectare
lot in Mandaue City; and (iv) a 49.85 sqm. condominium unit at Makati Prime Tower (subject
to notice of lis pendens registered by Prime Tower Property Group, Inc. in connection with its
case against Titan-Ikeda Construction and Development Corporation).
OPDI, which handles property acquisition and horizontal development, has the following
properties/projects: (a) a 33-hectare property in Sto. Tomas, Batangas (about 18 hectares
of which have been sold and pending completion/transfer to a third party buyer); (b) 44hectare raw land in Kay-Anlog, Laguna (of which 13 lots, with an aggregate area of 119,282
sqm. which have been transferred to the City Government of Calamba last April 2012); (c)
about 13 residential lots in The Homelands Subdivision in Calamba, Laguna, with a total area
of about 2,030 sqm.; (d) Trellis Pocket Centre, a 747-sqm. commercial project located along
National Highway, Calamba; (e) additional 7,442 sqm. property known as the MARFA area at
the back of The Homelands, intended to be developed and marketed as the premier section
of The Homelands Subdivision; and (f) 639-sqm. property in J.P. Rizal, Makati City, to be
developed as a commercial/residential condominium.
The Company does not have plans to acquire any real property within the next twelve
months.
Item 3. Legal Proceedings
(1)
Legal Proceedings
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 8
a.
“Lavine Loungewear vs. First Lepanto-Taisho Insurance Corp. (now FPIC), et. al.”
Civil Case No. 68287
G.R. No. 197219 / CA GR CV No. 90499
----------------------------------------------------------------------------------------------------------A complaint for sum of money (representing insurance proceeds) with issuance of
Temporary Restraining Order (TRO) and Injunction was filed on 24 January 2001 with
the Pasig Regional Trial Court (RTC)-Branch 71, against the Company’s subsidiary,
FPIC, by its insured, Lavine Loungewear Mfg. Inc. (Lavine). Prior to the filing of the
suit, there was an intra-corporate dispute between two groups of stockholders of
Lavine, each group claiming to be the owner of Lavine and therefore entitled to
receive the insurance proceeds. Since FPIC could not determine which group of
Lavine stockholders to pay, FPIC only made partial payment on the claim.
On 2 April 2001, the RTC rendered a Decision finding FPIC liable to pay Lavine the
amount of P18,250,000 with 29% interest per annum from October 1998 until full
payment. A Special Order for Execution Pending Appeal was also issued by the
Court. As a result, certain assets of FPIC were garnished/attached. FPIC then filed a
Petition with prayers for TRO and Injunction with the Court of Appeals (CA)-10th
Division, which reliefs were granted.
On 29 May 2003, the CA-10th Division, in its Consolidated Decision, ruled as follows:
(1) setting aside the RTC Decision dated 2 April 2001; (2) declaring null and void the
Special Order dated 17 May 2002 and the Writ of Execution dated 20 May 2002; (3)
remanding the case to the lower court for pre-trial conference on the Second
Amended Answer-in-Intervention; and (4) payment of proceeds to Lavine (if
adjudged entitled to said proceeds) be withheld until a decision on the rightful
members of the Board of Directors of Lavine is issued by the intra-corporate court.
The Intervenors (a party to the intra-corporate dispute) filed a Motion for
Reconsideration (MR) with the CA-10th Division, to which FPIC filed its
Opposition dated 15 July 2003 together with a Motion for Immediate Lifting
of Garnishment.
On 20 April 2004, the CA resolved to lift the order of levy and notices of garnishment
on the real and personal properties and bank deposits of FPIC which were made
pursuant to the Special Order dated 17 May 2002 and Writ of Execution dated 20
May 2003 which were declared null and void by the CA.
A Petition for Review (PR) was filed by Intervenors with the Supreme Court (SC) to
set aside the CA Decision of 29 May 2003. The SC, in its Decision dated 25 August
2005, affirmed the CA Decision dated 29 May 2003. Said SC Decision became final
and executory.
Separately, FPIC filed an appeal with the CA of the RTC Decision dated 1 April 2001.
The records of the case have been forwarded to the CA on 28 January 2008. On 12
September 2008, FPIC received a Notice from the CA directing FPIC to file its
appellant’s brief within 45 days from receipt of the notice or until 27 October 2008.
FPIC filed its Appellant’s Brief with the CA on 6 November 2008. Intervenorappellees Harish Ramnani, et.al filed an Amended Motion to Dismiss (MTD) Appeal
of Defendant Equitable PCI-Bank dated 14 November 2008. Intervenor-Appellees
filed its Consolidated Brief dated 8 January 2009 to which FPIC filed its Appellant’s
Reply Brief dated 11 February 2009.
Meanwhile, on 6 January 2009, Villaraza Cruz Marcelo & Angangco (VCMA) filed its
Entry of Appearance as counsel for appellant Banco de Oro Unibank, Inc. (BDO)
(formerly Equitable PCI Bank) and filed an Opposition to the Amended MTD filed by
Intervenor-appellees.
The CA, in its Resolution dated 8 May 2009, resolved as follows: (i) the MTD filed by
Intervenor-appellees was denied; (ii) entry of appearance of counsel for BDO was
noted; (iii) Appellee’s Brief filed by Lavine on 10 February 2009 (which was one day
late) was admitted in the interest of justice; (iv) Reply Brief of defendant appellants
Rizal Surety and Insurance Co., Tabacalera Insurance Co. and FPIC (which was filed
late) were admitted; (v) BDO given an inextendible period of 45 days from
notice within which to file appellant’s brief; and (vi) plaintiff-appellee’s Consolidated
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 9
Brief was admitted without prejudice to filing of an appellee’s brief in response to
appellant BDO.
BDO filed its Appellant’s brief to which intervenor-appellees filed their Appellee’s
Brief. BDO in turn filed a Reply Brief.
The CA issued a Decision dated 30 September 2010 which affirmed the RTC Decision
dated 2 April 2002 in all respects except that it exempted BDO from paying 10% of the
actual damages due and demandable as and by way of attorney’s fees. Briefly, the
Decision ruled relative to FPIC that:
(a) Intervention (by intervenors) was done and allowed so that the real
representatives of party-plaintiff could sue on behalf of the latter;
(b) FPIC is liable for P18,250,000.00 because the insurance proceeds totaled
P169,300,000.00 with interest per lead adjuster’s valuation;
(c) FPIC must pay interest as it did not file an interpleader and consignation suit for
this purpose;
(d) FPIC liable to pay 29% interest (i.e., twice the interest ceiling of 14.5%) as
provided under Section 243 of the Insurance Code of 1978; and
(e) FPIC is liable for attorney’s fees as it compelled plaintiff-appellee, through
intervenors, to file the instant suit to collect money due from it.
On 5 November 2010, FPIC filed an MR of the CA Decision dated 30 September
2010.
The CA issued a Resolution dated 9 June 2011 which affirmed the 30 September
2010 CA Decision subject to the following modifications:
1. Phil Fire is liable to plaintiff-appellee through intervenors for the sum of
P8,628,278.57 with 6% interest per annum (p.a.) from 26 November 2001 and
12% p.a. from finality of the resolution until full paid;
2. Rizal Surety is liable for P10,616,608.10 with 6% interest p.a. from 26 November
2001 and 12% p.a. from finality of the resolution until fully paid;
3. FPIC is liable for the sum of P10,145,760.11 with 6% interest p.a. from 26
November 2001 and 12% p.a. from finality of resolution until fully paid;
4. Tabacalera Insurance is liable for the sum of P11,189,530.22 with 6% interest
p.a. from 26 November 2001 and 12% from finality of resolution until fully paid;
5. Award of 10% attorney’s fees is deleted;
6. BDO’s MR on the issue of overpayment is remanded to the trial court for
computation;
7. The loan mortgage annotations on TCT Nos. 2390684, CCT Nos. PT-1787185,
PT-1787286 and PT-1787387 are declared valid and subsisting until the
obligations secured thereby shall have been completely discharged based on the
trial court’s final computation; and
8. Amounts due to Lavine, through intervenors-crossclaimants-appellees, are
subject to priority satisfaction of its remaining obligation to BDO, if any subsists
based on trial court’s final computation as directed, and payment of docket fees
corresponding to intervenors-crossclaimants-appellees’ money claims as prayed
for in their Second Amended Answer–in-Intervention with Counterclaim dated 15
October 2001. Should the trial court’s final computation as required yield an
overpayment, the same should be reimbursed to Lavine, through intervenorcrossclaimants-appellees.
Intervenors-Crossclaimants-Appellees filed a Motion for Partial Reconsideration
(MPR) of the CA Resolution dated 9 June 2011. The CA in its Resolution dated 5
September 2011 denied the MPR for lack of merit. The Motion for Extension of Time
to File Petition for Review on Certiorari filed by Phil Fire, and the Appeal by Certiorari
filed by plaintiff-appellee Lavine filed before the SC were duly noted.
On 30 June 2011, FPIC filed a Motion for Extension of Time to File PR (under Rule
45 of the Rules of Court) of the CA Decision and CA Resolution with the SC. FPIC
filed its PR on Certiorari with the SC on 29 July 2011.
The SC issued a Resolution dated 1 February 2012 which resolved:
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(1) to note the withdrawal of appearance of Atty. Arturo S. Santos as counsel for
intervenors-crossclaimants respondents Jose F. Manacop, et.al., with
conformity;
(2) to note the entry of appearance of Atty. Ronaldo M. Caringal of Rivera Santos
and Maranan, Unit 2902-D West Tower, Philippine Stock Exchange Centre,
Exchange Road, Ortigas Center, Pasig City, as counsel for intervenorscrossclaimants-respondents Jose F. Manacop, et.al., with conformity, requesting
that henceforth, all notices, orders and other papers relative to this case be
forwarded to them at said address;
(3) to grant the motion by respondent BDO for extension of ten (10) days from 7
November 2011 within which to file a comment (re: appeal by certiorari dated 30
June 2011);
(4) to note the comment of respondent FPIC re: petitioner’s appeal by certiorari
dated 30 June 2011;
(5) to require petitioner to file a Reply thereto within ten (10) days from notice
hereof;
(6) to grant the motion of respondent FPIC to consolidate G.R. No. 197227 with
G.R. Nos. 1977219, 197244 and 198481;
(7) to grant the respondents motion for extension of twenty (20) days from 18
November 2011 within which to file a comment on the PR;
(8) to grant the second and third motion of respondent BDO for extension totaling
twenty five days from 17 November 2011 within which to file comment (re:
appeal by certiorari dated 30 June 2011);
(9) to note the omnibus motion of respondent Phil Fire to be furnished with a copy of
the petition for consolidation;
(10) to note the comment of counsel for petitioner Lavine on the omnibus motion,
stating that it has personally served a copy of the petition upon counsel for
respondent Phil Fire at the address provided in the said omnibus motion, with
attachments;
(11) to note the comment of respondent Phil Fire on Lavine’s petition for review on
certiorari with prayer for the issuance of temporary restraining order;
(12) to require petitioner to file a Reply thereto within ten (10) days from notice
hereof;
(13) to note the comment of counsel for respondent Rizal Surety on the petition for
review on certiorari;
(14) to require petitioner to file a Reply thereto within ten (10) days from notice
hereof;
(15) to note and consider as satisfactory the petitioner’s compliance with the
Resolution dated 8 August 2011 which required petitioner to submit a proper
verification of the petition.
b.
“Chevron Philippines, Inc. (formerly Caltex) vs. FPIC, et.al.”
Civil Case Nos. 02-856 [Makati RTC- Br. 62]/ CA G.R. CV No. 94985
02-857 [Makati RTC- Br. 59]/ CA G.R. CV No. 86623/G.R. No.177839
02-858 [Makati RTC-Br. 61]/CA G.R. CV No. 92226/G.R. No. 198039
---------------------------------------------------------------------------------------------Chevron Philippines, Inc. (Chevron) filed three civil cases against FPIC for recovery
of sum of money pursuant to the terms and conditions of the surety bonds issued by
FPIC to secure each of the obligations of Peakstar Oil Corporation (Peakstar),
Fumitechniks Corp. of the Philippines (Fumitechniks) and R.S. Cipriano
Enterprises (Cipriano) to Chevron. In all these cases, FPIC cited as its defense that in
the absence of written principal agreements (between Chevron and the three
abovenamed obligors), the surety bonds (issued by FPIC), which are mere accessory
contracts, could not have come into being or are void.
Status: Case No. 02-587/G.R. No. 177839 (Fumitechniks case deemed closed and
terminated.)
(i)
Fumitechniks Account (Civil Case No. 02-857)- Chevron filed a claim against
FPIC in the amount of P15,314,265.76 with Makati RTC-Branch 59. As in
the Peakstar case, FPIC filed a Motion to Strike Out Testimony and Evidence
of the Chevron’s witnesses on grounds that they were in violation of the Parol
Evidence Rule, irrelevant and immaterial and unenforceable under the
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Statute of Frauds. The case was submitted for decision upon filing by the
parties of their respective memoranda.
On 5 August 2005, the RTC issued a Decision dismissing Chevron’s
complaint as well as the counterclaims of FPIC. Chevron then filed an
appeal with the CA. FPIC also interposed an appeal with the CA on the
dismissal of its counterclaims. Upon filing of FPIC’s Appellant’s Brief and
Appellee’s Brief and Reply (to plaintiff’s appellant’s brief), the case was
deemed submitted for resolution.
The CA issued a Decision dated 20 November 2006 which reversed the RTC
Decision. Chevron filed an MPR while FPIC filed an MR of the CA Decision,
which were both subsequently denied by the CA.
On 26 June 2007, FPIC filed a PR with the SC (docketed as G.R. No.
177839). The Parties were required, and have submitted their respective
Memoranda in 2008.
On 18 January 2012, SC issued a Decision which partly granted the PR and
set aside the Decision dated 20 November 2006 and Resolution dated 8 May
2007 of the CA. The Decision of the RTC dated 5 August 2005 dismissing
Chevron’s complaint as well as FPIC’s counterclaim was reinstated and
upheld.
Chevron filed an MPR dated 14 February 2012 to which FPIC filed its
Opposition dated 20 February 2012.
The SC issued Resolution dated 29 February 2012 which denied the MPR
with Finality. Entry of Judgment was made on 4 May 2012.
The following cases remain pending:
(i)
Peakstar Account (Civil Case No. 02-856)- Chevron filed a claim against
FPIC for the recovery of the sum of P26,257,712.58 before Makati RTCBranch 62. FPIC filed a Motion to Strike Out Testimony and Evidence of
Chevron’s witnesses on grounds that they were in violation of the Parol
Evidence Rule, irrelevant and immaterial and unenforceable under the
Statute of Frauds. The RTC granted FPIC’s Motion and the said testimonies
and evidence were stricken off the records.
Chevron filed an MR of the Order striking out the testimonies of the plaintiffs’
witnesses which was denied by the court. Chevron then filed a PR with the
CA which was dismissed by the CA as per Decision dated 28 September
2007 which has become final and executory.
In the RTC, FPIC finished its presentation of evidence and Formal Offer of
Evidence (FOE). The parties were asked to file their respective Memoranda.
On 26 September 2008, FPIC filed its Memorandum dated 20 September
2008. Chevron filed its Memorandum dated 18 September 2008 (received by
FPIC on 2 October 2008). FPIC filed its Reply (to Plaintiff’s Memorandum)
dated 6 October 2008.
RTC issued a Decision dated 28 December 2009 in favor of Chevron which
ordered FPIC to pay Chevron P26,257,712.58 plus interest starting 6
February 2009 until fully paid plus attorney’s fees and costs of suit. FPIC
filed its Notice of Appeal on 5 February 2010.
FPIC filed its Appellant’s Brief with the CA on 22 November 2011. The CA
issued a Resolution dated 31 March 2011 which referred the parties to the
Philippine Mediation Center-CA for mediation to give the parties one final
chance to explore the possibility of amicable settling their dispute. Mediation
proceeding was held on 29 July 2011. Mediation proceedings were
terminated as the parties deemed it unlikely for the parties to reach a
settlement in view of the legal issues involved. Case was referred back to
CA for decision. FPIC filed a Manifestation and Submission dated 10
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October 2011 with the CA informing the CA of the pendency of a similar case
involving Chevron and FPIC (CA Case No. 92226) and that the MPR filed by
Chevron in said case was already denied by the CA and Chevron has
already filed a PR with the SC.
FPIC filed a Manifestation and Submission dated 31 January 2012 informing
the Honorable Court about the SC (First Division) Decision in the similar case
of Fumitechniks (GR No. 177839) which dismissed the complaint filed by
Chevron against FPIC in RTC-Makati Br. 61. FPIC submitted that the
Decision in said case (G.R. 177839) should be applied in this case and that
the complaint filed by Chevron should be dismissed.
(iii)
Cipriano Account (Civil Case No. 02-858)- A case against FPIC for recovery
of sum of money in the amount of P10 million was filed by Chevron with
Makati RTC-Branch 61. Again, FPIC filed its Motion to Strike Out Evidence
on the grounds that they were in violation of the Parol Evidence Rule,
irrelevant and immaterial and unenforceable under the Statute of Frauds,
which was denied by the court. FPIC then filed an MR of the Order denying
FPIC’s Motion to Strike Out Evidence which has been submitted for
resolution. After FPIC’s presentation of evidence, the case was submitted for
decision.
On 8 August 2008, the RTC issued a Decision in favor of Chevron. FPIC
filed a Notice of Appeal to the CA. FPIC filed its Defendant-Appellant’s Brief
with the CA on 10 July 2009. Chevron has filed its Appellee’s Brief, to which
FPIC filed a Reply Brief.
On 4 May 2011, the CA issued its Decision which reversed the RTC Decision
dated 8 August 2008 and dismissed the complaint a quo for lack of merit.
Chevron filed an MPR dated 26 May 2011 for the reversal of the 4 May 2011
Decision. The CA, in its Resolution dated 3 August 2011, denied Chevron’s
MPR. Chevron filed PR dated 22 September 2011 with the SC. FPIC filed
Respondent’s Comment dated 16 January 2012 to Chevron’s PR.
FPIC filed a Manifestation and Submission dated 31 January 2012 informing
the Honorable Court about the SC (First Division) Decision in the case
entitled “First Lepanto Taisho Insurance Corporation vs. Chevron Philippines,
Inc.” (GR No. 177839) involving the same parties as the instant case and
submitting that the decision dismissing the case filed by Chevron, although
the decision is not yet final, the conclusion in said case should be applied in
this case.
The SC in a Resolution dated 27 February 2012 resolved to:
(1)
(2)
Note FPIC’s comment on the PR and the Manifestation and
Submission dated 31 January 2012; and
Require petitioner chevron to comment on the Manifestation and
Submission within ten (10) days from notice.
FPIC filed with the SC a Second Manifestation and Submission dated 28 May
2012.
Chevron filed its Comment to FPIC’s Manifestation and Submission dated 26
June 2012, to which FPIC filed its Reply dated 26 June 2012.
On 9 July 2012, FPIC filed a Third Manifestation and Submission and Reply
to Petitioner’s Comment dated 26 June 2012 and reiterated its prayer that the
Decision in the Fumitechniks case which has become final and executory and
has been recorded in the Book of Entries of Judgments on 4 May 2012, be
applied in this case and that the complaint filed against FPIC be dismissed.
On 15 August 2012, the SC issued a Resolution that resolved to:
(1)
Note:
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(a)
(2)
c.
FPIC’s Second Manifestation and Submission dated 28 May
2012;
(b)
Chevron’s Comment dated 26 June 2012 on FPIC’s
Manifestation and Submission; and
(c)
FPIC’s Third Manifestation and Submission dated 4 July
2012 which included a copy of the Entry of Judgment dated
13 June 2012 in G.R. No. 177839 and a Reply to Chevron’s
Comment dated 26 June 2012; and
Required Chevron to file:
(a)
Consolidated Comment to FPIC’s Second and Third
Manifestation within ten (10) days from notice; and
(b)
Reply to FPIC’s Comment dated 16 January 2012 within ten
(10) days from notice.
“Qualifurn Marketing Corp. vs. FPIC”
Civil Case No. 08-679
Makati RTC Br. 59
------------------------------------------------A Complaint for specific performance and damages was filed with Makati RTC
Branch 148 by insured against FPIC for payment of P20,000,000 for and as actual
damages (with 24% interest thereon from 30 July 2007 until fully paid) as its claim
under Fire Insurance Policy No. F-29577 issued by FPIC. FPIC denied the claim as
the existence and value of the insured items have not been established by plaintiff.
FPIC filed its Answer dated 16 October 2008. FPIC filed a Motion to Conduct Judicial
Dispute Resolution (JDR) dated 20 July 2009. The RTC granted the said Motion and
set the JDR on 16 September 2009. As no settlement was reached, the JDR was
terminated and the case was re-raffled to Makati RTC Branch 59.
Pre-trial was held on 12 March 2010. Plaintiff has presented three (3) witnesses and
will present three (3) more witnesses. Hearing on-going.
d.
“Fritta, S.L. vs. LCI”
Civil Case No. 3911-06-C
-----------------------------------A case for collection of sum of money was filed by a supplier, Fritta, against LCI
before Calamba RTC-Br. 92. Plaintiff Fritta is demanding payment in the principal
amount of L332,452.73 (about P22,433,920.44), attorney’s fees of P500,000 plus
costs of suit.
On 5 April 2006, LCI filed an MTD on the grounds of lack of capacity to sue as Fritta
is a foreign corporation and Fritta’s defective certification against forum shopping. On
8 June 2006, the RTC issued an Order denying LCI’s MTD. On 11 July 2006, LCI
filed an MR of said Order, to which Fritta filed its Opposition. On 11 August 2008, LCI
filed its Reply. The RTC issued an Order dated 17 October 2007 denying LCI’s MR.
LCI then filed its Answer Ad Cautelam dated 17 November 2006 to which Fritta filed
its Reply dated 12 December 2006.
On 22 December 2006, LCI filed a Petition for Certiorari (PC) and Prohibition with
prayer for the issuance of a TRO and/or Injunction (CA-G.R. SP No. 97331) with the
CA, assailing the 8 June 2006 and 17 October 2007 Orders of the RTC. On 17 May
2007, the CA issued a Decision dismissing the PC and thereafter denied LCI’s MR.
On 26 October 2007, LCI filed a PR with the SC (G.R. No. 179596). On 17 November
2008, the SC dismissed the PR. On 3 February 2009, LCI filed an MR to which Fritta
filed its Comment/Opposition. The MR has been denied by the SC.
Meanwhile, pre-trial was held on 29 May 2007. Fritta filed a Motion to Take
Deposition (of its 3 witnesses in Spain) (MTTD) dated 11 June 2007 to which LCI filed
its Opposition dated 27 June 2007. The RTC, in its Order dated 17 July 2007,
granted Fritta’s MTTD. LCI filed an MR on the RTC Order dated 17 July 2007, which
was denied by the RTC in its Order dated 2 October 2007.
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On 18 December 2007, LCI filed a PC (CA-G.R. SP No. 101754) with the CA,
assailing the 17 July and 2 October 2007 Orders of the RTC. Upon order of the CA,
both parties filed their respective Memoranda on 21 June 2008 (LCI) and 29 June
2008 (Fritta). On 7 February 2011, the CA issued a Decision dismissing the PC. On
21 February 2011, LCI filed an MR. On 29 April 2011, Fritta filed its Opposition to the
MR. On 29 May 2011, LCI filed a Reply to the Opposition. On 25 October 2011, the
CA issued a Resolution denying the MR.
Consequently, on 11 November 2011, LCI filed a PR with the SC (SC G.R. No.
199076). On 20 February 2012, LCI filed a Motion to Suspend Proceedings in view of
the issuance of the Commencement Order in LCI’s Rehabilitation Case pending
before RTC-Calamba, Branch 34. On 27 February 2012, the SC issued Order
denying the PR. On 13 June 2012, the SC issued Resolution noting the Motion to
Suspend.
On 16 August 2007, in response to Fritta’s MTTD dated 11 June 2007, LCI filed a
First Request for Admission (FRA) that Fritta’s witnesses in Spain could only read
and write in Spanish and not in English. On 23 November 2007, Fritta belatedly
filed a Motion to Admit Reply to Request for Admission (MARRA), attached to
which were the answers of Fritta’s witnesses to the FRA. On 16 January 2008, the
RTC issued an Order granting Fritta’s MARRA. LCI filed an MR. On 5 March 2008,
the RTC denied LCI’s MR.
On 9 May 2008, LCI filed a PC (CA G.R. SP No. 103576) with the CA, assailing the
16 January and 5 March 2008 Orders of the RTC. On 6 August 2008, Fritta filed its
Comment to the PC. On 4 September 2008, LCI filed its Reply. On 27 August 2009,
the CA rendered a Decision dismissing the PC. On 17 September 2009, LCI filed an
MR. On 19 April 201, the CA issued a Resolution denying the MR. Consequently, on
7 June 2010, LCI filed a PR with the SC (G.R. No. 191991). On 6 September 2010,
Fritta filed a Motion for Extension of Time to File Comment. On 7 October 2010, Fritta
filed its Comment. On 20 February 2012, LCI filed a Motion to Suspend Proceedings.
On 31 July 2012, Fritta filed Comment on the Motion. The Motion is now submitted for
resolution.
On 15 June 2007, Fritta filed a Manifestation to correct the Pre-trial Order dated 29
May 2007, specifically, to reflect therein that LCI admitted that: (1) it received Fritta’s
products in good order; (2) for every transaction, Fritta issued a receipt to confirm
payment; (3) the genuineness and due execution of the documents marked in
evidence by plaintiff, Fritta. On 27 June 2007, LCI filed its Comment to the
Manifestation, opposing the amendment of the Pre-trial Order. On 11 July 2007,
Fritta filed its Reply. On 31 July 2007, LCI filed its Rejoinder. On 20 June 2008, the
court amended the Pre-trial Order to reflect therein LCI’s admission that it received
Fritta’s products in good order and that Fritta may avail itself of the modes of
discovery as the need arises in the course of trial. On 16 July 2008, LCI filed an MR.
On 12 August 2008, the RTC denied LCI’s MR. On 20 October 2008, LCI filed a PC
(CA GR SP No. 105977) with the CA, assailing the 20 June and 12 August 2008
Order of the RTC. On 8 December 2008, Fritta filed its Comment/Opposition to the
PC. Upon order of the CA, the parties filed their respective Memoranda on 20
February 2009 (LCI) and 15 March 2009 (Fritta).
Meantime, on 1 April 2009, the CA resolved to refer the PC to the Philippine
Mediation Center for the conduct of mediation proceedings. On 23 September 2009,
as the parties were unable to reach a settlement after five mediation conferences, the
Mediator declared failure of mediation and terminated the mediation proceedings.
Thus on 28 September 2009, the CA issued a Resolution which deemed the PC
submitted for decision.
On 12 October 2009, the CA rendered a Decision dismissing the PC. On 3
November 2009, LCI filed an MR which was denied by the CA in its Resolution dated
16 December 2009. On 18 February 2010, LCI filed a PR with the SC (G.R. No.
190891), which was denied by the SC in a Resolution dated 22 March 2010, which
Resolution has become final and executory.
On 31 March 2008, Fritta filed a Notice to Take Deposition through Written
Interrogatories of its Spanish witnesses. On 26 June 2008, the RTC issued an Order
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overruling LCI’s Objections. On 6 August 2008, LCI filed an MR, to which Fritta filed
its Opposition. On 18 September 2008, LCI filed its Reply to Fritta’s Opposition. On
30 September 2008, the RTC denied LCI’s MR. On 12 December 2008, LCI filed a
PC (CA G.R. SP No. 106903) with the CA. On 25 February 2009, Fritta filed its
Comment/Opposition to the PC. On 9 March 2009, LCI filed its Reply. On 19 March
2009, the CA required the parties to file their Memoranda. LCI filed its Memorandum
on 1 April 2009 while Fritta filed its Memorandum on 21 April 2009. On 13 August
2009, the CA dismissed the PC. On 8 September 2009, LCI filed an MR. On 19 April
2010, the CA issued a Resolution denying the MR. On 7 June 2010, LCI filed a PR
with the SC (G.R. No. 191992). The SC, in a Resolution dated 4 August 2010,
dismissed the PR, which Resolution has become final and executory.
On 19 August 2009, by virtue of the CA’s dismissal of the Petition in CA G.R. SP No.
106903, Fritta served upon LCI the Notice to Take Deposition through Written
Interrogatories, setting the deposition of Fritta’s witnesses on 25 September 2009 at
the Philippine Embassy in Madrid, Spain. On 18 May 2010, the CA issued an Order
setting the date of the marking of the Answer to Written Interrogatories on 6 July 2010
and giving LCI 30 days from 18 May 2010 to file the Cross-Interrogatories. LCI
served Cross-Interrogatories on 17 June 2010. Trial on 5 October 2010 was reset to
15 February 2011 to give time to the Department of Foreign Affairs (DFA) to arrange
taking of deposition of Fritta’s witness using LCI’s cross-interrogatories. Hearing on
15 February 2011 was reset to 5 April 2011 due to lack of notice from the DFA
regarding the deposition. Hearing on 5 April 2011 was reset to 2 August 2011 upon
Fritta’s manifestation that the deposition in the Philippine Consulate in Madrid, Spain
would take place in the second week of May 2011. Hearing on 2 August 2011 was
reset to 8 November 2011 due to lack of notice from the DFA regarding the
deposition of Fritta’s witnesses.
In the meantime, on 30 May 2011, LCI filed a Motion to Amend Pre-Trial Order (PTO)
(to include issue of whether LCI was aware that Fritta was doing business on the
Philippines without license). On 9 June 2011, Fritta filed its Opposition. On 14 June
2011, LCI filed Reply. On 6 July 2011, the RTC issued an Order denying the Motion
to Amend PTO. On 9 August 2011, LCI MR. On 2 September 2011, the Court issued
an Order denying the MR. On 14 November 2011, LCI filed a PC with the CA (CAG.R. SP No. 122213). On 20 February 2012, LCI filed a Motion to Suspend
Proceedings with the CA. On 28 May 2012, Fritta filed Comment on the Motion. On 4
July 2012, the CA issued a Resolution dismissing the PC.
On 20 February 2012, LCI likewise filed a Motion to Suspend Proceedings with the
RTC-Calamba, Br. 92. On 9 March 2012, the Court issued an Order granting the
Motion.
e.
LCI’s Real Property Tax Assessment/Warrant of Levy
---------------------------------------------------------------------------Status: Transfer of Titles Completed/ Real Property Tax Assessment Settled
In August 2006, LCI received from the Office of the City Treasurer of Calamba
(OCTC) a Notice of Delinquency on Real Property Tax (RPT) (due on buildings
and machineries located in Barangays Tulo and Makiling), in the amount of
P84,344,676.25 (including penalties), covering the period from the 4th quarter of 1999
up to 2006.
On 12 December 2006, LCI sent a letter dated 17 November 2006 to the Office of the
City Assessor reiterating its request (made in April 2005) for a review and reappraisal
of LCI’s machineries and equipment as a major portion thereof were already fully
depreciated and have not been operational for several years. There was, however, no
response to LCI’s letter.
On 31 July 2007, as the RPT remained unpaid, LCI received copies of the OCTC’s
Final Notices of Delinquency (FNDs), directing LCI to settle its RPT delinquency, in
the total amount of P98,466,645.72, covering the period from the 4th quarter of 1999
to 2007.
On 15 August 2007, LCI submitted its letter-response to the FNDs, requesting for a
reduction on LCI’s tax payables on the grounds that: 1) LCI has provided significant
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contributions to Calamba’s economy and employment level; 2) some of the
machineries and equipment subject of the FNDs were almost fully depreciated; and
3) the Calamba City Government’s right to collect RPT due from 1999 to 2001 has
already prescribed.
On 14 September 2007, LCI submitted a letter of even date to the OCTC following up
on its request for review and reappraisal of its machineries and equipment, stressing
that the value of such properties have already substantially depreciated.
On 10 October 2007, the OCTC sent a letter dated 5 October 2007 to LCI advising it
that its request for re-appraisal of the said buildings and machineries would have no
effect on its outstanding RPT payables subject of the FNDs, as any such re-appraisal
cannot be given retroactive effect. Further, the OCTC demanded that LCI settle its
RPT delinquency within 5 days from receipt of the letter.
On 19 October 2007, LCI sent a letter to the OCTC requesting that the penalties and
surcharges and the RPT due from 1999 to 2001 (which have already prescribed) be
deducted from its tax payables, and proposed that the remaining P44,842,850.40 be
paid over a period of 5 years.
Sometime in August 2008, LCI received a Schedule of Compromise Agreement from
the OCTC whereby LCI would pay the total amount of P121,672,975.31, covering
LCI’s supposed tax delinquency from the 4th quarter of 1999 up to 2008, in 8
installments. (However, the installment dates were not specified.) On 2 September
2008, LCI sent a letter dated 28 August 2008 to the OCTC requesting for a waiver of
the penalties and surcharges (amounting P46,376,922.81) and proposing that the
principal RPT due in the amount of P75,296,052.50 be paid by way of dacion of
various real properties located in Calamba, Laguna. There was, however, no
response to this letter.
On 16 October 2008, LCI received a Warrant of Levy dated 11 August 2008 issued
by the OCTC on LCI’s buildings and machineries, directing LCI to settle its RPT
delinquency, amounting to P121,672,975.31, within 10 days from notice; otherwise,
its buildings and machineries would be sold at a public auction.
On 23 October 2008, LCI sent a letter dated 22 October 2008 to the OCTC
requesting for an additional period of 30 days from 26 October 2008 or until
November 25 2008, within which to submit a reasonable settlement proposal on its
outstanding RPT delinquency, and for the implementation of the Warrant of Levy to
be held in abeyance. The OCTC granted LCI’s request.
On 25 November 2008, after discussions with the City Government of Calamba
(CGC) and the OCTC regarding the settlement of the tax delinquency, LCI submitted
a letter to the OCTC, together with an initial check payment of P2 million, reiterating
the request for the implementation of the Warrant of Levy to be held in abeyance
pending discussions on a definitive payment arrangement in February, March, April
2009. LCI paid another P1 million to the OCTC.
On 29 April 2009, LCI received a Notice of Real Property Tax Delinquency (NRPTD)
from the OCTC regarding LCI’s real property tax arrears in the amount of
P131,591,748.09. On 20 July 2009, LCI submitted a letter to the OCTC offering to
dacion several real properties in Calamba as payment for the arrears, and requesting
the deferment of the auction sale of the LCI properties subject of the NRPTD set on 8
September 2009. OCTC agreed to exclude LCI properties in the auction.
On 26 October 2009, the Sangguniang Panlungsod of Calamba (SP-Calamba)
passed Resolution No. 286, Series of 2009 granting relief from payment of interests
and penalties on RPT arrearages from 2008 and prior years on the condition that the
delinquencies are settled from 2 November 2009 to 31 March 2010. On 29 March
2010, the SP-Calamba passed Resolution No. 101, Series of 2010 authorizing
Calamba Mayor Joaquin Chipeco, Jr. to enter into a Memorandum of Agreement
(MOA) with LCI and OPDI whereby OPDI will convey its properties in Brgy. KayAnlog, Calamba to the CGC as settlement or in exchange for the RPT obligations of
LCI amounting to P75,078,200. On 30 March 2010, the MOA was signed and
executed. On 12 April 2012, original copies of the titles to the conveyed properties,
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issued in the name of Calamba City Government, were turned over to and received
by the Office of the Administrator of Calamba City.
f.
“Petition for Rehabilitation of Lepanto Ceramics, Inc.”
RTC SEC Case No. 90-2011-C
[RTC Calamba Br. 34]
---------------------------------------------------------------------------On 23 December 2011, LCI filed a Petition for Rehabilitation (PR) with RTC-Calamba.
On 13 January 2012, RTC-Calamba, Branch 34 issued a Commencement Order
(CO) which, among others, stayed enforcement of all claims against LCI accruing
prior to 13 January 2012 (“pre-commencement obligations”). On 26 March 2012, the
Court issued an Order, giving due course to the PR and directing the Rehabilitation
Receiver, Atty. Roberto R. Mendoza, to submit a revised Rehabilitation Plan (RP)
based on comments submitted by creditors.
On 3 April 2012, the Rehabilitation Receiver submitted a Preliminary Registry of
Claims based on the list of obligations submitted by LCI and Claims filed by creditors.
On 22 May 2012, LCI filed a Challenge of the Claims of certain creditors. On 1 June
2012, the Rehabilitation Receiver submitted the revised Registry of Claims upon
consideration of the creditors’ comments and challenges to the Preliminary Registry
of Claims. On 18 July 2012, LCI filed its Appeal on the Registry of Claims, which
remains pending.
In the meantime, on 10 February 2012, LCI filed a Motion for Exemption of payment
of obligations to 2 Chinese suppliers (Shenzen Yudayuan Trade Ltd. and China
Glaze Co., Ltd.) and separation pay to employees, which accrued prior to 13 January
2012. Also, on 26 March 2012, LCI filed a Motion for Exemption of the replenishment
of its employees’ health fund under the administration of Intellicare. On 13 July 2012,
the Court issued an Order allowing the replenishment of LCI’s health fund but
denying the payment of pre-commencement obligations to the Chinese suppliers and
employees. On 17 August 2012, LCI filed an MR. On 30 August 2012, the Court
issued an Order (1) allowing payment of pre-commencement obligations to Shenzen,
(2) denying payment of pre-commencement obligations to China Glaze, and (3)
deeming the motion for reconsideration with respect to the separation pay of
employees submitted for resolution.
In the meantime, in June 2012, the Rehabilitation Receiver distributed copies of the
Amended and Restated Rehabilitation Plan to all creditors on record. On 21 June
2012, the creditors voted to reject the Plan. On 27 June 2012, submitted the
Amended and Restated Rehabilitation Plan together with a report on the results of the
voting to the Court. In August 2012, the Rehabilitation Receiver distributed to all
creditors on record copies of the Second Amended and Restated Rehabilitation Plan.
On 22 August 2012, the creditors voted to reject the Plan. On the same day, the
Rehabilitation Receiver submitted the Plan together with a report on the results of the
voting to the Court. Rehabilitation Receiver to craft Third Amended and Restated
Rehabilitation Plan.
g.
“Archipelago Philippine Ferries Corporation vs. FPIC,
Yuen Po Seng, Amado A. Mauleon and Martial V. Careng”
Civil Case No. 12-061
[RTC Muntinlupa Br. 276]
--------------------------------------------------------------------------------------A Complaint for specific performance of insurance contract, exemplary damages
attorney’s fees was filed by insured against FPIC for payment of P13,622,000.62 for
and as actual damages for loss of/damage to insured vessel M/V Maharlika Siete
(with 24% interest thereon until fully paid), exemplary damages of P1,000,000 and
attorney’s fees of P500,000, under Policy No. MH-NIL-HO-08-0000015-0 issued by
FPIC.
FPIC filed its Answer with Special and Affirmative Defenses and Compulsory
Counterclaim dated 15 June 2012. Co-respondent Careng filed a MTD dated 30 May
2012. Plaintiff filed its Comment/Opposition to the MTD to which defendant filed its
Reply.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 18
The Court in its Order dated 29 August 2012 denied the MTD filed by defendant
Careng.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the security holders of the Company during the fourth
quarter of the fiscal year.
PART II - OPERATIONAL AND FINANCIAL INFORMATION
Item 5. Market for Issuer’s Common Equity and Related Stockholder Matters
A.
Market Information
The Company’s Common Shares are listed and principally traded in the PSE.
The high and low sales prices* of the Company’s securities for each quarter are indicated in
the table below:
High
Low
Fiscal Year 2012 (July 2011-June 2012)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
(Jul. 2011-Sept. 2011)
(Oct. 2011-Dec. 2011)
(Jan. 2012-Mar. 2012)
(Apr. 2012-Jun. 2012)
P0.82
0.57
0.64
0.53
P0.44
0.44
0.44
0.42
Fiscal Year 2011 (July 2010-June 2011)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
(Jul. 2010-Sept. 2010)
(Oct. 2010-Dec. 2010)
(Jan. 2011-Mar. 2011)
(Apr. 2011-Jun. 2011)
P0.49
0.48
0.73
0.59
P0.39
0.425
0.45
0.45
Stock price as of latest practicable trading date of 24 October 2012: P0.50 per share.
*provided by PSE Corporate Planning & Research Section
B.
Holders
The number of shareholders of record as of 30 September 2012 was 957. Common shares
outstanding as of the same period were 2,366,444,383.
Top 20 stockholders* (as of 30 September 2012):
Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
No. of Shares Subscribed
PCD Nominee Corporation (Filipino)
1,193,698,759
Genez Investments Corporation
250,000,000
F. Yap Securities, Inc.
196,481,700
Lepanto Consolidated Mining Co.
180,000,000
PCD Nominee Corporation (non-Filipino)
147,603,199
Dao Heng Securities (Phils.), Inc.
34,521,000
Guoco Securities (Phils.), Inc.
30,082,000
Caridad Say
24,707,000
YHS Holdings Corporation
22,900,000
Victor Say
21,500,000
Gilbert Dee
19,598,000
SEC Account FAO: Various Customers of Guoco
Securities (Philippines), Inc.
18,511,380
G.D. Tan & Co., Inc.
17,480,400
David C. Go
16,000,000
Dao Heng Securities (Phils.), Inc. A/C# M0002-A
14,000,000
David Go Securities Corp. A/C # 1085
11,816,000
David Go Securities Corp.
10,702,120
Coronet Property Holdings Corp.
6,000,000
% to Total
50.44%
10.56
8.30
7.61
6.24
1.46
1.27
1.04
0.97
0.91
0.83
0.78
0.74
0.68
0.59
0.50
0.45
0.25
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 19
19. Federal Homes, Inc.
20. Eleonor Go
Total
5,492,000
5,400,000
-----------------2,226,493,558
===========
0.23
0.23
--------94.08 %
====
*based on the report dated 30 September 2012 of Stock and Transfer Agent, Banco de Oro Unibank,
Inc.-Trust and Investments Group
C.
Dividends
There were no dividend declarations for the years 2010 to 2012.
D.
Recent Sales of Unregistered Securities
The Company has not sold any unregistered securities within the past three fiscal years.
Item 6. Management's Discussion and Analysis or Plan of Operation
Management's Discussion and Analysis or Plan of Operation
Fiscal Year 2012
Consolidated Results of Operations
The Group ended the fiscal year with a consolidated net income of P100.5 million, lower than
the P273.1 million reported income last fiscal year. The decrease in net income was due to
lower gain on sale of Available-For-Sale (AFS) investments and investment property
compared to last year.
Consolidated revenues reached P1.2 billion, lower by 12% from previous year’s P1.3 billion.
Revenue from insurance business grew by 5% as the motor car business continues to
spearhead growth increasing by 14% during the year. On the other hand, rental revenue from
real estate business decreased by 3% as occupancy was challenged by the intense
competition around Divisoria. Merchandise sales from tile business also decreased by 23%
resulting from lower sales volume and decrease in production.
Total cost and expenses decreased by 8% as operating expenses and cost of sales went
down by 3% and 21%, respectively, though tempered by the 9% increase in insurance
underwriting cost. The decrease in operating expenses was attributable to lower marketing
expenses, repairs and maintenance, taxes and licenses. Though insurance underwriting cost
increased, this was mainly attributable to higher claims. Underwriting cost as percentage of
Net Premiums Earned improved by 2 percentage points, to 77% from 79% last year. Increase
in rent and utilities and cost of production were adversely affected by higher energy costs.
Tutuban Properties, Inc. (TPI)
TPI reported a net income of P55.3 million during the year compared to P54.4 million last
year. Increased competition within the area affected occupancy. Total revenue from mall
operations went down by 3% while operating cost increased by 4% similarly driven by higher
energy costs.
FLT Prime Insurance Corporation (FPIC)
FPIC registered a 16% growth in its bottomline for the year 2012, from P21.7 million to P25.2
million. Net premiums earned increased by 11% as FPIC sustained its double digit growth
with strong performances from motor car and accident and health businesses, which grew by
14% and 36%, respectively. Retention ratio also improved by 10%, from 65% to 72%.
Lepanto Ceramics (LCI)
During the year, net loss from the tile business increased to P62.2 million, from P50.6 million.
The increase in net loss was attributed to higher production cost resulting from the increasing
cost of power and fuel. The increase in cost of production was negated by the 10% reduction
in operating expenses. Decrease in net sales was due to lower sales volume.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 20
On 23 December 2011, LCI filed a Petition for Rehabilitation (Petition) with RTC-Calamba
under the Financial Rehabilitation and Insolvency Act of 2010, to arrest its continuing financial
losses for the past several years and to enable it to eventually meet its financial obligations to
its creditors. On 26 March 2012, the Court issued an Order giving due course to the Petition
and directing the Rehabilitation Receiver to submit an amended Rehabilitation Plan (RP)
based on comments submitted by creditors. Subsequently, the Rehabilitation Receiver
submitted to the Court the first and second amended RPs, which were both rejected by the
creditors. As of 3 October 2012, the Rehabilitation Receiver is preparing the third amended
RP for presentation to the creditors.
Prospects for the Future
While Tutuban Center has redefined the shopping culture in Divisoria over the past two
decades, becoming the area’s premier wholesale and retail shopping destination along the
way, it has recently begun to introduce dynamic and interactive business concepts aimed at
distinguishing itself from the rising competition within the area.
rd
The Orion Hotel, located in the 3 Floor, will lead the transformation of the Prime Block
building. This 41-room hotel project, is being marketed as a “businessman’s hotel” offering
three-star amenities. Actual construction has been completed and is set to formally open this
November 30. To complement Orion Hotel, the rest of the third floor will also be transformed
to complement the hotel operations. Plans for function rooms, a buffet area and other
commercial establishments are currently underway. Architectural and engineering plans to
transform the recovered areas at the building’s ground floor are also being finalized to include
a 24-hour convenience store along Padre Algue Street as well as the conversion of the grand
staircase facing Recto Ave. into a two-level leasable area. Meanwhile, the Centermall is being
transformed into a destination center for recreation. The 3,200 square meter former cinema
area will be converted into bigger and more entertaining concepts targeting the entire family.
It will be preceded by the opening of the Virtual Zoo project in October. The newly renovated
Food Centers will welcome Tutuban’s mall goers with a fresh look and more flavorful offerings
starting this holiday season.
The immediate challenge for FPIC is to meet the P250 million capitalization requirement
ending calendar 2012, a 42% increase from the previous year’s requirement. The company is
confident in meeting this new requirement and is now preparing its three-year business plan.
FPIC’s main thrust is attaining that delicate balance of growing its premium and client base
while maintaining a healthy bottomline while ensuring adequate protection for its clients.
Major challenges brought about by the relaxation of safeguard measures against imported
tiles and the volatile cost of fuel continue to adversely affect LCI production costs. Before the
end of December 2011, LCI filed for corporate rehabilitation to arrest the mounting losses as
a result of these challenges. The subsequent Stay Order issued in January 2012 will hopefully
give LCI the chance to rebuild the business by utilizing cash flow directly for operations.
Key Variable and Other Qualitative and Quantitative Factors
The Top 5 Key Performance indicators of the Group are as follows:
Ratios
Formula
30-Jun-12
Current Ratio
Current Assets
1.61: 1
Current Liabilities
2,177,854/ 1,351,377
30-June-11
1.41:1
2,258,594/ 1,601,889
Debt to Equity Ratio
Total Liabilities
Equity
0.98:1
2,115,062/ 2,146,385
1.19: 1
2,332,727/ 1,964,744
Capital Adequacy
Ratio
Equity
Total Assets
0.494: 1
2,146,385/ 4,346,955
0.449:1
1,964,744/ 4,372,143
Book Value per
Share
Equity
Total # of Shares
0.9067
2,146,385/ 2,367,149
0.8300
1,964,744/ 2,367,149
Income (Loss) per
Share
Net Income (Loss)
Total # of Shares
0.042
100,547/ 2,367,149
0.115
273,109/ 2,367,149
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 21
Current ratio shows the Group’s ability to meet its short term financial obligation.
As of 30 June 2012, the Group has P1.61 worth of current assets for every peso of current
liabilities as compared to P1.41 as of 30 June 2011. Increase was attributable to the
settlement of outstanding obligation. The Group has sufficient current assets to support its
current liabilities as of the period.
Debt to Equity ratio indicates the extent of the Group’s debt which is covered by
shareholder’s fund. It reflects the relative position of the equity holders. The higher the ratio,
the greater the risk being assumed by the creditors. A lower ratio generally indicates greater
long term financial safety. Compared to 30 June 2011, debt to equity ratio improved as a
result of increase in equity for the current period by 9%.
Capital Adequacy Ratio is computed by dividing the Total Stockholders’ Equity over Total
Assets. It measures the financial strength of the Company. As of 30 June 2012, the Group’s
Capital Adequacy Ratio is 0.494 compared to last year’s 0.449. Improvement was attributable
to increased equity as of the period.
Book value per share measures the recoverable amount in the event of liquidation if assets
are realized at book value. As of 30 June 2012, the Group has book value per share of P0.91.
Income per share is calculated by dividing net income by the weighted average number of
shares issued and outstanding. As of 30 June 2012, the Group reported a P0.042 income per
share as compared to last year’s P0.115 per share.
(i)
Any known trends, demands, commitments, events or uncertainties that will have
a material impact on issuer’s liability.
There are no known trends or any known demands, commitments, events or
uncertainties that will result in or that are reasonably likely to result in the Group’s
liquidity increasing or decreasing in any material way.
On 4 September 2012, a fire occurred at the Cluster Buildings 1 and 2 and
Bonifacio Plaza of TPI’s investment properties that resulted to casualty losses,
with an estimated amount of P450.0 million.
(ii)
Events that will trigger direct or contingent financial obligation that is material to
the Company, including any default or acceleration of an obligation
There are no known events that will trigger direct or contingent financial obligation
that is material to the Group, including any default or acceleration of an
obligation.
(iii)
Material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships with unconsolidated entities or
other persons created during the reporting period.
There are no known off-balance sheet transactions, arrangements, obligations
(including contingent obligations), during the period.
(iv)
Material Commitment for Capital Expenditure
The Group has not entered into any material commitment for capital expenditure.
(v)
There are no known trends, events or uncertainties that have material impact on
net sale/revenues/income from continuing operation.
(vi)
The Group did not recognize income or loss during the year that did not arise
from continuing operations.
(vii)
There are no known causes for material change (of material item) from period to
period.
(viii)
There are no known seasonal aspects that had a material effect on the financial
condition or results of operations.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 22
Financial Condition
Consolidated assets of the Group stood at P4.3 billion. Total Current Assets was higher than
its Total Current Liabilities, which stood at P2.2 billion and P1.4 billion, respectively. Proceeds
from disposal of AFS investments resulted to an increase in Cash and Cash Equivalents. AFS
investments slightly decreased as a result of the disposal; however, increase in unrealized
valuation gain of 20% was due to higher market value of the remaining shares. Receivables
went down by 24% caused by improved collections and lower merchandise sales. Inventories
decreased by 31% due to lower production. Likewise, decrease in Leasehold Rights
represents amortization during the year. Other Current Assets grew by 7% due to unutilized
creditable withholding tax and input value added tax. Decline in Other Non-current Assets
represents decrease in deferred reinsurance premium.
The Group registered a decrease in total liabilities of about 10%. Accounts Payable and
Accrued Expenses decreased due to settlement of outstanding liabilities to suppliers and
insurance claims. Retirement obligation decreased as a result of additional contribution to the
retirement fund as of the period. Deferred income tax liabilities increased due to the tax effect
of the revaluation increment in property and equipment recorded during the year.
Financing Through Loans
As of the reporting period, the Group has no outstanding loan from any financial institution.
Fiscal Year 2011
Consolidated Results of Operations
The Group ended the fiscal year with a net income of P273.1 million which was significantly
lower than the P1.95 billion income reported last year. Net income from last year included a
one-time gain of P1.54 billion arising from the settlement of loans of the Group. A significant
portion of last year’s profit also included gain on sale of asset done to generate cash flow for
the repayment of Group loans.
Revenue from mall operations slightly grew to P505 million from P498 million, while the
Insurance business provided the most significant result with revenues increasing by 25% to
P184 million. The motor car business continues to spearhead growth increasing by 47%
during the period. However, consolidated revenues decreased by 6.5% to P1.33 billion as Net
Sales from tile business went down to P640 million due to lower sales volume as sales and
marketing efforts focused on value-added products and designs which provide better prices
and margins.
For the fiscal year ended, consolidated cost and expenses decreased by 9% as operating
expenses went down by 12% though tempered by the 11% increase in insurance underwriting
cost. The decrease in operating expenses was attributable to lower professional fees incurred
for the fiscal year. Though insurance underwriting cost increased, this was mainly due to
higher commission expense arising from the 25% growth in revenue. Underwriting cost as
percentage of Net Premiums Earned (NPE) significantly improved, as it went down to 79%
from 88% last fiscal year.
TPI
Overall, TPI showed a 21% growth as its net income registered at P54 million for the fiscal
year ended, compared to P45 million net income last year. Income from mall operations grew
by 23% as growth in rental revenue from night market operations and semi-permanent carts
tempered lower income generated from parking and exhibits. Overhead cost decreased by
12% due to lower professional fees paid during the period.
FPIC
For the fiscal year ended, FPIC showed a significant turn-around as it posted a net income of
P21.7 million as against the P8.8 million net loss last year. The substantial development was
attributable to the considerable growth in NPE (24%), increase in Commission Income (34%)
and improvement in Investment Income (17%), coupled by reduced underwriting cost ratio
from 88% to 79%.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 23
Retention ratio has also improved by 15%, from P149 million last year to P167 million this
year, as Net Premiums Retained (NPR) from motor car business grew by 21% or P16.5
million higher than last year.
LCI
LCI ended the fiscal year with a net loss of P51 million as compared to P50 million last year,
which was 2% higher than last year, excluding gain on settlement of debt. Net sales dropped
by 7% as sales volume declined, cushioned by the increase in sales price.
Prospects for the Future
TPI expects the full turnover of the remaining 12 hectares from PNR by 31 December 2011 as
well as the completion of PNR’s Master Development Plan for its own areas covered under
the Renewal of Contract of Lease. From there, TPI will proceed with the redevelopment of
Phase II-A based on the TPI masterplan developed with the Palafox Architects.
For Phase II-A, envisioned developments stretching from Mayhaligue to Tayuman will include
an auto-city/bike depot, a restaurants’ row/strip mall, review centers/ educational institutions,
and a commercial pocket center. Initial plans for all these have been drafted and detailed
planning will proceed once turnover is complete.
With the finalization of PNR’s masterplan for its own land-use on areas covered under Phase
II-B, TPI is considering warehouses, storage centers and deck parking as utilization of its air
rights in said area.
Looking ahead, FPIC has opened a new branch in Imus, Cavite, to beef up its presence and
to service the CALABARZON area. To sustain the growth of its motor car line, FPIC forged
new tie-ups with various major car dealers and with other motor car service providers. It has
increased the number of accredited repair shops nationwide to better serve its clients. It has
also embarked on cross-selling of other product lines particularly, its residential insurance
package using its present data base. Accident & Health lines were also re-packaged and
new products were developed to suit its present clients. With these new programs, FPIC
expects sustainable growth this 2012 of its NPR that will translate to a higher Net Income for
the company.
Moving forward, while the focus will remain on pushing the higher margin rustic products, LCI
and its exclusive marketing partner, OMI, will have to run a tighter production and sales
operations. The focus will now be on more efficient production runs (reduced wastages, better
formulation, managed overheads) and growing the business with key retail partners.
Key Variable and Other Qualitative and Quantitative Factors
The Top 5 Key Performance indicators of the Group are as follows:
Ratios
Formula
30-Jun-11
Current Ratio
Current Assets
1.47: 1
Current Liabilities
2,349,468/ 1,601,889
30-June-10
1.32:1
2,215,319/ 1,679,876
Debt to Equity Ratio
Total Liabilities
Equity
1.22:1
2,389,551/ 1,964,744
1.35: 1
2,471,188/ 1,831,762
Capital Adequacy
Ratio
Equity
Total Assets
0.444: 1
1,964,744/ 4,428,967
0.419:1
1,831,762/ 4,369,805
Book Value per
Share
Equity
Total # of Shares
0.8300
1,964,744/ 2,367,149
0.7738
1,831,762/ 2,367,149
Income (Loss) per
Share
Net Income (Loss)
Total # of Shares
0.115
273,109/ 2,367,149
0.824
1,951,325/ 2,367,149
Current ratio shows the Group’s ability to meet its short term financial obligation. As of 30
June 2011, the Group has P1.47 worth of current asset for every peso of current liabilities as
compared to P1.32 as of 30 June 2010. The increase was attributable to the settlement of
outstanding obligation. The Group has sufficient current assets to support its current liabilities
as of the period.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 24
Debt to Equity ratio indicates the extent of the Group’s debt which is covered by
shareholders’ fund. It reflects the relative position of the equity holders. The higher the ratio,
the greater the risk being assumed by the creditors. A lower ratio generally indicates greater
long term financial safety. Compared to 30 June 2010, debt-to-equity ratio improved as a
result of increase in equity for the current period by 10%.
Capital Adequacy Ratio is computed by dividing the Total Stockholders’ Equity over Total
Assets. It measures the financial strength of the Company. As of 30 June 2011, the Group’s
Capital Adequacy Ratio is 0.444 compared to last year’s 0.419. Improvement was attributable
to increased equity as of the period.
Book value per share measures the recoverable amount in the event of liquidation if assets
are realized at book value. As of 30 June 2011, the Group has book value per share of P0.83.
Income per share is calculated by dividing net income by the weighted average number of
shares issued and outstanding. As of 30 June 2011, the Group reported a P0.115 income per
share as compared to last year’s P0.824 per share.
(i)
Any known trends, demands, commitments, events or uncertainties that will have
a material impact on issuer’s liability.
There are no known trends or any known demands, commitments, events or
uncertainties that will result in or that are reasonably likely to result in the Group’s
liquidity increasing or decreasing in any material way.
(ii)
Events that will trigger direct or contingent financial obligation that is material to
the Group, including any default or acceleration of an obligation
There are no known events that will trigger direct or contingent financial obligation
that is material to the Group, including any default or acceleration of an
obligation.
(iii)
Material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships with unconsolidated entities or
other persons created during the reporting period.
There are no known off-balance sheet transactions, arrangements, obligations
(including contingent obligations), during the period.
(iv)
Material Commitment for Capital Expenditure
The Group has not entered into any material commitment for capital expenditure.
(v)
There are no known trends, events or uncertainties that have material impact on
net sale/revenues/income from continuing operation.
(vi)
The Group did not recognize income or loss during the year that did not arise
from continuing operations.
(vii)
There are no known causes for material change (of material item) from period to
period.
(viii)
There are no known seasonal aspects that had a material effect on the financial
condition or results of operations.
Financial Condition
Total Assets of the Group slightly increased to P4.43 billion from P4.37 billion last year. Total
current assets and total current liabilities stood at P2.3 billion and P1.6 billion, respectively.
Proceeds from disposal of Available for Sale (AFS) Investments and net result of operations
of TPI resulted to increased Cash and Cash Equivalents. As a result of the sale, AFS
investments dropped by 34%. Advance rental of TPI to PNR increased the Receivables by
7%. Inventories increased by 24% due to higher inventory volume. Decrease in Leasehold
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 25
Rights represents amortization recognized during the period. Decrease in Investment
Property was due to disposal of real estate property and depreciation as of the period.
Property, Plant and Equipment slightly increased due to additional acquisition softened by
recognition of depreciation for the period. Decrease in Held to Maturity (HTM) Investment was
due to withdrawal of matured investments. Other Non-current Assets decreased due to
application of deposits as payment to current charges within the fiscal year.
Overall, the Group registered a decrease in Total Liabilities of 3% from 30 June 2010. Total
Current Liabilities decreased by 5% as the Group fully settled the remaining balance of the
cost of property acquired, hence accounts payable and accrued expenses decreased by 6%,
softened by the increase in rental deposit and advances by 2%. Decrease in Unrealized
Valuation Gain was attributable to disposal of AFS investments as of the period.
Financing Through Loans
As of the reporting period, the Group has no outstanding loan from any financial institution.
Fiscal Year 2010
Consolidated Results of Operations
The Group ended the fiscal year with a consolidated net income of P1.95 billion compared to
last year’s net loss of P289.9 million. The EBITDA of the Group, excluding gain from
extinguishment of debt, gain on sale of assets and reversal of probable losses, has
considerably improved by 440% for the year, compared to the 29% growth last year.
Consolidated revenues, which are composed of merchandise sales, rental revenue, insurance
premiums and commissions and real estate sales, posted a growth of 9.90% this fiscal year.
Increase was greatly attributable to real estate sales, as the Group sold its property assets to
fund settlement of its loans and other obligations. Insurance premiums also increased by 45%
as the Group intensified its motor car business. While average rate escalation contributed to
6% increase in rental revenue. Merchandise sales was posted at P703.6 million, which is 3%
less from preceding year’s sales of P721.8 million.
Operating expenses went down by 10% as the Group continued to improve its business
processes and rationalize its organizational structure. Cost of goods sold and services
dropped by 10% as a result of improved production cycle times, lower wastages and lower
cost of energy. However, the significant increase in insurance underwriting deductions, which
is 96% higher than last year due to increase in claims and losses arising from property
damages brought by typhoons “Ondoy” and “Peping” in 2009 that almost doubled the
insurance losses this fiscal year, neutralized the reduction in operating expenses and cost of
goods sold and services. Overall, consolidated costs and expenses remained at P1.5 billion
at the end of 30 June 2010.
The Group also reported an income from extinguishment of debt of P1.25 billion, arising from
the full settlement of the Group’s remaining loans, and gain from sale of a portion of its
property in Mandaue, Cebu amounting to P420.1 million.
Financial Condition
For the fiscal year 2010, the consolidated resources of the Group remained at P4.3 billion.
Total current assets of P2.2 billion, was slightly higher by 2% than last year due to
appreciation of the market value of AFS investments coupled by significant increase in
insurance receivables, and substantial decrease in cash and cash equivalents.
Reduction in cash and cash equivalents by 71% was brought about by the settlement of the
Group’s remaining loan obligations. Decrease in inventories of 7% was attributable to reduced
production cost. Decrease in held-to-maturity investments was a result of reclassification of
funds to cash equivalents and AFS. Net decrease in investment property, leasehold rights
and property, plant and equipment was attributable to disposal of an investment property and,
amortization and depreciation for the period. Increase in other non-current assets was due to
deferred reinsurance premium and capitalization of development cost of pocket commercial
center in Calamba, Laguna.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 26
Total current liabilities stood at P1.7 billion, which is 56% lower than last year. The substantial
movement was attributable to the full settlement of the outstanding loan obligations of the
Group during the year. The full extinguishment of the loan obligations resulted to the reversal
of the related accrued interest, penalties and provision for probable losses, hence accounts
payable and accrued expenses dropped by 28%. Accrual of retirement benefits for the period
resulted to increase in retirement obligation. Repayment of advances resulted to reduction in
amounts owed to related parties. By and large, the Group’s total liabilities went down by 46%
from 30 June 2009. On the other hand, improvement in market prices of securities held by the
Group resulted to increase in unrealized valuation gain.
Financing through Loans
On 10 August 2009, the Group entered into a Compromise Agreement with Asset Pool A
(SPV-AMC), Inc. (APA) to settle the remaining loans of the Group which were acquired by
APA from the Group’s creditors. The Group and APA agreed for the full and complete
settlement of the Group’s loan obligations with principal amount of about P1.5 billion for a
total consideration of P680 million (the “Compromise Amount”) which shall be payable within
a period of 18 months. Upon execution of the Agreement, the Group paid the amount of P200
million.
Also, On 10 August 2009 and 18 December 2009, the Group sold portions of its investment
property located in Mandaue, Cebu to partly fund the settlement of the Compromise Amount.
The corresponding cash proceeds and installment receivables arising from the sales totaling
P430 million were assigned to APA as partial settlement of the Compromise Amount.
On 15 March 2010, the balance of the Compromise Amount in the amount of P49.5 million
was fully paid by Group. Accordingly, the Group’s outstanding loan obligations of P1.5 billion
as of 30 June 2009 was fully paid by 15 March 2010.
LCI
For the year, LCI was able to reduce its operating loss by 75%, from P161 million in 2009 to
P41 million in 2010, as it continued to improve its operational performance and strengthen its
production efficiency while lowering wastages. LCI’s continuing path to recovery remains
hinged on improvements in its production efficiency. It envisaged to fully utilize its existing
jumbo kilns, hence increasing its monthly output by 25%.
Moving a step further, LCI implemented its Energy Conservation Project during the year to
address the volatility and surging prices of fuel. This project, which uses alternative fuels,
intends to reduce fuel consumption in power production and will be operational by November
2010. Once operational, the project will help bring LCI forward to a better energy source and
will reduce fuel cost by 24%. Overall, it is expected to lower total production cost by 9%.
OMI
OMI’s efforts to pave the way for enabling growth in its revenues and market reach were
hinged on stronger retail sales operations, expanded market coverage across current sales
territories, and improved client servicing. These endeavors cleared the path for OMI to
achieve a more significant presence in the industry, as it drumbeats for Lepanto Tiles, its
banner brand and product.
Retail sales rose exponentially this fiscal year, as a result of new strategies implemented by
the retail sales team. OMI matched its major retail partners’ aggressive expansion this year,
and it did so by shifting its product mix focus to define Lepanto’s expertise and reputation as
the leading rustic ceramic tile manufacturer in the country. With this thrust, OMI solidified
Lepanto as a brand of choice with the most expansive selection of rustic tiles in the local
market.
OMI has undertaken retail measures such as the employment of an efficient network of
merchandisers to ensure that all retail outlets were properly branded, stocked with ample fastmoving items, and equipped with merchandising support. With this sustained dedication of the
retail sales team, their ability to be one step ahead of their customers, and knowledge of what
the market needs, it is expected that retail sales will grab a bigger share of the total sales
volume in the near future.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 27
OMI also widened Lepanto’s reach in 2010 with the signing up of new distributors in Isabela,
Bicol, Iloilo, Davao, and General Santos thus furthering Lepanto’s visibility. Marketing
supports were provided to distributors while presence through sub-dealer networks and
project bids were increased. All these expansion activities are part of OMI’s roadmap for its
distributor business channel, which aims to pull all stops for Lepanto to remain competitive
and leverage on its strengths over competitors. Moving forward, OMI is tapping a handful of
key distributors with potential for business growth with customized business programs
designed specifically for those particular distributors’ network needs.
TPI
Amid the growing competition within the Divisoria area, TPI occupancy remained stable. As a
result, revenue growth from mall operations went up by 6% from P487.9 million in 2009 to
P516 million in 2010. Rental revenues from pre-designated areas as well as those from night
market operations and other ancillary sources all contributed to this performance. Meanwhile,
sustained efforts in cost management paid off as TPI’s operating expenses stood at 5% lower
than the previous year. As a result, the company’s net income (before depreciation on
revaluation increments) increased to P55 million from P13 million in 2009.
TPI’s renewal of its lease contract with the PNR for another 25 years beginning 2014
underpinned the most important development for the year. The lease renewal agreement
which covers a total of 20 hectares of PNR property will allow Tutuban to make full-use of the
current 8.5 hectares where Tutuban Mall is situated as well as an additional 11.5 hectares of
combined land and air rights use.
As nearby areas continue to transform the landscape of Divisoria with new structures of
commercial viability, TPI has re-energized itself after successfully inking its renewal contract
with the PNR. As early as now, TPI has started crafting its redevelopment and expansion
plans that will ensure leadership for Tutuban Mall and has already commissioned as partners
in these redevelopment programs the likes of CB Richard Ellis, INSPIRE Consultants and
Palafox Architects. Expectations abound for the unveiling of a new masterplan before the end
of 1st quarter of 2011. As the saying goes, “Full steam ahead!”
Expect vitality with the changes that will unravel as TPI journeys in the next 25 years and
anticipate the grandeur of Tutuban Mall relived, revealed and revitalized for the years to
come!
FPIC
The first half of the fiscal year ending 2010 shows the non-life insurance industry experiencing
one of the largest combined claims in its history. With Typhoon Ondoy and Pepeng hitting
Metro Manila and Northern Luzon respectively in a span of two weeks, total estimated losses
for the whole industry runs around P18 billion. FPIC was not spared from this calamity. As a
result, FPIC posted a net loss of P11.2 million.
With the continued success of its marketing program, FPIC’s Gross Premiums Written (GPW)
increased by 69% from P155.6 million in 2009 to P262.8 million in 2010, whilst NPR also
increased by 61% from P109.9 million in 2009 to P177.4 million in 2010. This was attributed
to the highly retained line of business such as motor car, personal accident and residential
accounts.
Looking ahead, FPIC’s major thrust is to sustain the growth it has achieved in the last two
years as it focuses on the development of new products, competitive pricing, targeting new
markets as well as new producers, and a fast & efficient claims handling. Quality Service
and Client Satisfaction will remain its priority.
Prospects for the Future
The Group will enter 2011 with the momentum from our landmark achievements in 2010.
Moving forward, the Group will also have, on top of the full utilization of Tutuban’s current 8.5hectare location, additional 11.5 hectares of combined land use and air rights of PNR
property. As nearby areas continue to transform the landscape of Divisoria with new
structures of commercial viability, Tutuban Mall has re-energized itself after successfully
inking its renewal contract with the PNR. As early as now, TPI has started crafting its
redevelopment and expansion plans that will ensure leadership for Tutuban Mall.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 28
Looking ahead, FPIC’s major thrust is to sustain the growth it has achieved for the last two
years as it focuses on the development of new products, competitive pricing, targeting new
markets as well as new producers, and a fast & efficient claims handling. Quality Service
and Client Satisfaction will remain its priority.
Moving a step further, LCI implemented its Energy Conservation Project during the year to
address the volatility and surging prices of fuel. This project, which uses alternative fuels,
intends to reduce fuel consumption in powder production and will be operational by November
2010. On the other hand, OMI is tapping a handful of key distributors with potential for
business growth with customized business programs designed specifically for those particular
distributors’ network needs.
Key Variable and Other Qualitative and Quantitative Factors
The Top 5 Key Performance indicators of the Group are as follows:
Ratios
Formula
30-Jun-10
Current Ratio
Current Assets
1.32: 1
Current Liabilities
2,214,721/ 1,679,876
30-June-09
0.57:1
2,165,028/ 3,797,857
Debt to Equity Ratio
Total Liabilities
Equity
1.35:1
2,471,188/ 1,831,762
-14.48: 1
4,590,144/ -317,044
Capital Adequacy
Ratio
Equity
Total Assets
0.419: 1
1,831,762/ 4,369,805
-0.073:1
-317,044/ 4,343,859
Book Value per
Share
Equity
Total # of Shares
0.7738
1,831,762/ 2,367,149
-0.1339
-317,044/ 2,367,149
Income (Loss) per
Share
Net Income (Loss)
Total # of Shares
0.824
1,951,325/ 2,367,149
-0.122
-289,450/ 2,367,149
Current ratio shows the Group’s ability to meet its short term financial obligation. As of 30
June 2010, the Group has sufficient current assets to support its current liabilities as
evidenced by increase in current assets, from P0.57 centavos in 2009 to P1.32 for the period,
vis-à-vis its current liabilities. Significant increase in receivables and higher market value of
available for sale investments contributed to a better current ratio for this period.
Debt to Equity ratio indicates the extent of the Group’s debt which is covered by
shareholders’ fund. It reflects the relative position of the equity holders. For fiscal year 2010,
the Group’s debt to equity ratio has improved, from negative P14.48 last year to positive
P1.35 this year. Improvement was attributable to recognition of gain on extinguishment of
debt as well as gain on sale of a portion of the investment property.
Capital Adequacy Ratio is computed by dividing the Total Stockholders’ Equity over Total
Assets. It measures the financial strength of the Group. As of 30 June 2010, the Group’s
Capital Adequacy Ratio showed a 6.74% improvement, from negative .073 of the previous
year to positive 0.419 this year. Similarly, recognition of gain on extinguishment of debt and
gain on sale of portion of the investment property contributed to a higher equity this year.
Book value per share measures the recoverable amount in the event of liquidation if assets
are realized at book value. As of 30 June 2010, the Group posted a book value per share of
positive P0.77 compared to negative P0.13 in the previous year.
Earnings per share is calculated by dividing net income by the weighted average number of
shares issued and outstanding. As of 30 June 2010, the Group showed an income of P0.824
per share compared to loss of P0.122 per share in 2009.
(i)
Any known trends, demands, commitments, events or uncertainties that will have
a material impact on issuer’s liability.
On 26 July 2010, the Group and APA have fully complied the terms and
conditions enumerated in the Compromise Agreement (i.e. the Group has fully
settled with APA the Compromise Amount, and APA has released to the Group
the remaining properties held as collaterals). Accordingly, the Group and APA
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 29
have jointly moved for the dismissal of all pending cases between the Group and
APA.
(ii)
Events that will trigger direct or contingent financial obligation that is material to
the Group, including any default or acceleration of an obligation
There are no known events that will trigger direct or contingent financial obligation
that is material to the Group, including any default or acceleration of an
obligation.
(iii)
Material off-balance sheet transactions, arrangements, obligations (including
contingent obligations), and other relationships with unconsolidated entities or
other persons created during the reporting period.
There are no known off-balance sheet transactions, arrangements, obligations
(including contingent obligations), during the period.
(iv)
Material Commitment for Capital Expenditure
The Group has not entered into any material commitment for capital expenditure.
(v)
There are no known trends, events or uncertainties that have material impact on
net sale/revenues/income from continuing operation.
(vi)
The Group did not recognize income or loss during the year that did not arise
from continuing operations.
(vii)
There are no known causes for material change (of material item) from period to
period.
(viii)
There are no known seasonal aspects that had a material effect on the financial
condition or results of operations.
Item 7. Financial Statements
The consolidated financial statements and schedules listed in the accompanying Index to
Financial Statements and Supplementary Schedules are filed as part of this Form 17-A.
Item 8.Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
1)
External Audit Fees and Services
(a)
Audit and Audit-Related Fees
(1)
(2)
(b)
The aggregate fees billed by the auditors for FY 2012 amounted to P2.6 million
while the auditors’ fee for FY 2011 amounted to P2.4 million.
There are no known assurance and related services rendered by the external
auditor aside from the services stated above for FY 2012 and 2011.
Tax Fees
External Auditor did not render tax services and non-audit work for the Company in
FY 2012 and FY 2011.
(c)
All Other Fees
No known Other Services were rendered by external auditor aside from that stated
above for FY 2012 and 2011.
Audit and Audit-Related Fees are as follows:
2012
Professional Fees
P2,279,750
Value Added Tax
273,570
Total Audit Fees
P2,553,320
2011
P2,122,500
254,700
P2,377,200
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 30
(d)
The Audit Committee performs oversight functions over the Corporation’s external
auditors in accordance with the Company’s Revised Manual of Corporate
Governance (“Revised Manual”). It reviews and approves all reports of the external
auditors prior to presentation to the Board of Directors for approval.
The Audit
Committee discusses with the external auditor the scope and expenses for the audit
prior to conduct of the audit. It evaluates and recommends to the Board of Directors
the external auditors of the Company for the ensuing fiscal year.
2)
For fiscal year 2011/2012, the Partner-in-Charge assigned to handle the Company’s
account (until 2015) is Ms. Alicia O. Lu of Sycip Gorres Velayo and Co.. This is
compliant with the policy to change the external auditor or rotation of partner every
five years as provided in the Company’s Revised Manual.
There were no changes in or disagreements with the Company’s
accountants/auditors on accounting principles and practices or financial disclosures
during the fiscal year and the past two fiscal years. Neither was there any resignation,
dismissal or cessation of service of the external auditors of the Company for the past
three fiscal years.
PART III - CONTROL AND COMPENSATION INFORMATION
Item 9. Directors and Executive Officers of the Registrant
A.
List of Directors
The following list pertains to the directors of the Company for FY 2011-2012 which
includes the directorships/officerships held by the directors in other corporations (as
of 30 September 2012). Except as indicated, the directors have held their
directorships/officerships listed below for at least the past five years to the present.
The Company’s directors serve for a term of one year until the election and
acceptance of their qualified successors.
Director (Age)-Citizenship
Position
Name of Company
(As of 30 September 2012)
Felipe U. Yap (75) - Filipino
Chairman (2000-Present)
Vice Chairman (1993-2000)
Prime Orion Philippines, Inc.
Chairman of the Board
and Chief Executive Officer
Lepanto Consolidated Mining Company* (1988-present)
Lepanto Investment and Development Corp.
Diamant Boart Philippines, Inc.
Diamond Drilling Corporation of the Philippines
Far Southeast Gold Resources, Inc.
Manila Mining Corporation* (1988-present)
Shipside, Inc.
Chairman of the Board
Orion Land Inc.
Tutuban Properties, Inc.
Orion I Holdings Philippines, Inc.
Lepanto Ceramics, Inc.
FLT Prime Insurance Corporation
Zeus Holdings, Inc.* (Nov. 1998-present)
Yapster e-Conglomerate
Kalayaan Copper-Gold Resources, Inc.
Director
Orion Property Development, Inc.
Lepanto Condominium Corporation
Manila Peninsula Hotel, Inc.
Philippine Associated Smelting & Refining Corp.
Philippine Fire & Marine Insurance Corp.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 31
Chairman
Board of Governors, Philippine Stock Exchange, Inc.
(2000-2002)
David C. Go (71) - Filipino
Vice Chairman (1992 to Present) Prime Orion Philippines, Inc.
Director (1989 to Present)
Chairman
OE Holdings, Inc.
Orion Maxis Inc.
22Ban Marketing, Inc.**
Kolin Philippines, Inc.
ACA & Company
Chairman/President
Orion Property Development, Inc.
Orion Beverage, Inc.
President
Orion Land Inc.
Tutuban Properties, Inc.
TPI Holdings Corporation
Director
ZHI Holdings, Inc.
Orion I Holdings Philippines, Inc.
O.Y.L. Holdings, Inc.**
Orion Solutions, Inc.
Yuen Po Seng (52) - Malaysian
President (11 Jan. 2002 to Present) Prime Orion Philippines, Inc.
Exec.Vice Pres. (1993 to 10 Jan. 2002)
Treasurer (1995 to 10 Jan. 2002)
Director (1995 to Present)
Chairman/President
ZHI Holdings, Inc.
Orion Solutions, Inc.
O.Y.L. Holdings, Inc.**
Luck Hock Venture Holdings, Inc.**
President
FLT Prime Insurance Corporation
Orion I Holdings Philippines, Inc.
Lepanto Ceramics, Inc.
BIB Aurora Insurance Brokers, Inc.
Zeus Holdings, Inc.* (Nov. 1998-present)
Guoco Assets (Philippines), Inc. (Apr. 2011-present)
Hong Way Holdings, Inc. (Apr. 2011-present)
Director
Cyber Bay Corporation* (1993-present)
Central Bay Reclamation & Development Corp.**
Orion Land Inc.
Tutuban Properties, Inc.
TPI Holdings Corporation
Orion Property Development, Inc.
Orion Beverage, Inc.
Guoman Philippines Incorporated
OE Holdings, Inc.
Orion Maxis Inc.
Genez Investments Corporation
Treasure-House Holdings Corporation
Hume Furniture (Philippines), Inc. (Dec. 2008-present)
Daisy L. Parker (48)- Filipino
Director (2000-Present)
Prime Orion Philippines, Inc.
Corporate Secretary (1995-Present)
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 32
Director/Corporate Secretary
Orion Land Inc.
Tutuban Properties, Inc.
TPI Holdings Corporation
Orion Property Development, Inc.
Orion Beverage, Inc.
Luck Hock Venture Holdings, Inc.**
Orion I Holdings Philippines, Inc.
O.Y.L. Holdings, Inc.**
Lepanto Ceramics, Inc.
Zeus Holdings, Inc.* (March 2001-present)
ZHI Holdings, Inc.
FLT Prime Insurance Corporation
Orion Solutions, Inc.
BIB Aurora Insurance Brokers, Inc.
OE Holdings, Inc.
22Ban Marketing, Inc.**
Maxcellon Inc.
Orange Grove Investments Corporation (Sept. 2011-present)
Philtravel Corp. (Sept. 2012-present)
Director
Guoman Philippines Incorporated
Guoco Assets (Philippines), Inc. (Apr. 2011-present)
Hong Way Holdings, Inc. (Apr. 2011-present)
Corporate Secretary
Orion Maxis Inc.
Genez Investments Corporation
Treasure-House Holdings Corporation
Max Limousine Service Inc. (Mar. 2011-present)
Ronald P. Sugapong (45)-Filipino
Director (2007-present)
Treasurer (2002-present)
Prime Orion Philippines, Inc.
Director/Treasurer
Orion Land Inc.
Tutuban Properties, Inc.
TPI Holdings Corporation
Orion Property Development, Inc.
Orion Beverage, Inc.
Luck Hock Venture Holdings, Inc.**
Orion I Holdings Philippines, Inc.
Lepanto Ceramics, Inc.
O.Y.L. Holdings, Inc.**
Zeus Holdings, Inc.* (March 2001-present)
ZHI Holdings, Inc.
Orion Solutions, Inc.
Guoman Philippines Incorporated
OE Holdings, Inc.
Orion Maxis Inc.
22Ban Marketing, Inc. **
Guoco Assets (Philippines), Inc. (Apr. 2011-present)
Hong Way Holdings, Inc. (Apr. 2011-present)
Treasurer
FLT Prime Insurance Corporation
BIB Aurora Insurance Brokers, Inc.
Victor C. Say (67) - Filipino
(Independent Director, 2009-present)
Director (1989 to Present)
Prime Orion Philippines, Inc.
Chairman
Onetree Holdings, Inc. (March 2012 - present)
Director
SEATO Trading Co., Inc.
San Juan Enterprises, Inc.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 33
Kolin Philippines, Inc.
Seven of Us Foods, Inc.
Ricardo J. Romulo (79) - Filipino
(Independent Director, 2002 to present)
Director (1997 to Present)
Senior Partner
Prime Orion Philippines, Inc.
Romulo Mabanta Buenaventura Sayoc &
delos Angeles
Chairman
Cebu Air, Inc.*(26 Oct. 2010-present/ regular director)
Federal Phoenix Assurance Co. Inc.
Sime Darby Pilipinas, Inc.
Towers Watson Philippines, Inc.
Interphil Laboratories, Inc.
Manchester International Holdings Unlimited Corporation*
Director
BASF Philippines, Inc.
FLT Prime Insurance Corporation
Honda Philippines, Inc.
Johnson & Johnson (Phils.), Inc.
Kraft Foods (Phils.), Inc.
Maersk-Filipinas, Inc.
Philippine American Life and General Insurance Co.
Zuellig Pharma Corporation
JG Summit Holdings, Inc.* (July 2000-present /regular director)
SM Development Corporation*(June 1984 -present/
(May 1996-present/regular director)
independent director)
Trustee
Equitable Foundation, Inc.
IBM Philippines, Inc. Pension Plan
* listed company
**inactive
B.
Independent Directors
An independent director is a person who, apart from his fees and shareholdings, is
independent of management and free from any business or other relationship which could, or
could reasonably be perceived to materially interfere with his exercise of independent
judgment in carrying out his responsibilities as a director of the Company.
In compliance with the requirements of the Securities Regulation Code, the Company has two
independent directors, namely, Atty. Ricardo J. Romulo and Mr. Victor C. Say. They were
elected during the Corporation’s Annual Stockholders’ Meeting last 22 November 2011.
C.
Significant Employees
There are no non-executive officers who are expected by the Registrant to make a significant
contribution to the business.
D.
Family Relationships
There are no family relationships (up to fourth civil degree) either by consanguinity or affinity
among the abovenamed directors and executive officers.
E.
Involvement in Certain Legal Proceedings
The abovementioned directors and executive officers have not been involved in the following
events or legal proceedings that occurred during the past five (5) years up to the present
date which are material to an evaluation of the ability and integrity of the said directors and
executive officers:
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 34
a)
b)
c)
d)
Any bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or within two
years prior to that time;
Any conviction by final judgment in a criminal proceeding, domestic or foreign, or
being subject to a pending criminal proceeding, domestic or foreign, excluding traffic
violations and other minor offenses;
Being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, domestic or foreign,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities, commodities or banking activities;
and
Being found by a domestic or foreign court of competent jurisdiction (in a civil action),
the Commission or comparable foreign body, or a domestic or foreign exchange or
electronic marketplace or self-regulatory organization, to have violated a securities or
commodities law, and the judgment has not been reversed, suspended, or vacated.
Item 10. Executive Compensation
A.
Information as to aggregate compensation paid or accrued during the last two fiscal
years and the ensuing fiscal year to the Company’s Chief Executive Officer and four
other most highly compensated executive officers.
Name
Summary Compensation Table
Annual Compensation
Fiscal Year
Salary
(in P000s)
Yuen Po Seng
(President)
Ronald P. Sugapong
(SVP-Group Finance Officer)
Daisy L. Parker
(SVP-Chief Legal Counsel)
Ma. Rhodora P. dela Cuesta
(VP-Legal Dept.)
Edwin M. Silang
(AVP-Group HR)
CEO and four most highly
compensated Exec. Officers
All officers and directors as a
group unnamed
B.
2010-2011
2011-2012
2012-2013
2010-2011
2011-2012
2012-2013
2010-2011
2011-2012
2012-2013
2010-2011
2011-2012
2012-2013
2010-2011
2011-2012
2012-2013
2010-2011
2011-2012
2012-2013
(projected)
2010-2011
2011-2012
2012-2013
(projected)
Bonus
(in P000s)
Other Annual
Compensation
(in (P000s)
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
P 21,911.25
23,600.53
25,960.59
P6,182.84
6,354.85
6,990.33
P 824.74
848.85
933.73
P25,771.25
27,610.53
32,656.65
P6,182.84
9,854.85
11,189.36
P 824.74
848.85
1,027.11
Compensation of Directors/Executive Officers
Members of the Board of Directors are elected for a term of one year until the election and
acceptance of their qualified successors. They receive no compensation except reasonable
director’s fee as fixed by the Board of Directors at the end of the fiscal year.
The members of the Board who are executive officers of the Registrant are remunerated with
a compensation package comprising of 13-month base pay. In addition, they may receive a
performance bonus at year-end which the Board extends to the rest of the managerial,
supervisory and rank and file employees.
C.
Employment Contracts/Termination of Employment/Change-in Control Arrangements
No new executive was employed by the Company this year nor was there a change-in-control
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 35
arrangement last fiscal year.
There are no special terms or compensatory plans or arrangements resulting from the
resignation or termination of any executive officer’s employment or change-in control of
Company.
D.
Options Outstanding
The Company has no outstanding warrants and options.
Item 11. Security Ownership of Certain Beneficial Owners and Management
A.
Security Ownership of Certain Record and Beneficial Owners (more than 5%)
(As of 30 September 2012)
Title of
Class
Common
Common
Name & address of record
owner & relationship with
issuer
PCD Nominee Corp.*
G/F
Makati
Stock
Exchange, Ayala Ave.,
Makati City
Genez Investments Corp.
(GIC)**
20/F LKG Tower, 6801
Ayala Ave., Makati City
- Stockholder
Name of Beneficial
Owner & relationship
with record owner
GIC
20/F LKG Tower, 6801
Ayala Avenue,
Makati City
Citizenship
No. of Shares
Held
Percent
(%)
Filipino
1,193,698,759
50.44%
Filipino
250,000,000
10.56%
Filipino
196,481,700
8.30%
F.Yap Securities, Inc.***
17/F Lepanto Building,
8747 Paseo de Roxas,
Makati City
-Broker
Filipino
180,000,000
7.61%
Common
Lepanto
Consolidated Lepanto Mining
Mining
Co.
(Lepanto 21/F Lepanto Bldg.,
8747 Paseo de Roxas,
Mining)****
21/F Lepanto Bldg., 8747 Makati City
Paseo de Roxas, Makati
City
-Stockholder
Common
PCD Nominee Corp.
Non147,603,199
6.24%
G/F
Makati
Stock
Filipino
Exchange, Ayala Ave.,
Makati City
Total
1,967,783,658
83.15%
*PCD Nominee Corp.-a private company and wholly-owned subsidiary of the Philippine Central
Depository Inc. (PCDI), is the registered owner of the POPI shares; however, beneficial ownership of
such shares pertain to the PCD participants (brokers) and/or their clients (corporations or individuals) in
whose names these shares are recorded in their respective books. As per PCD List of Beneficial
Owners dated 30 September 2012, the following hold at least 5% of POPI’s voting stocks: (1) Guoco
Assets (Philippines), Inc. (GAPI)-451,256,180 (19.07%); (2) David Go Securities Corp. (DGSC)149,557,997 (6.32%); and (3) Quality Investments & Securities Corporation- 145,599,000 (6.15%).
-There is no specific nominee to vote these shares as the shares are held by different brokers.
Brokers issue the proxy as per instructions of their principal-clients/beneficial owners of the shares.
-GAPI, a company organized under Philippine laws, is 96.45%-owned by Singapore-based Guoco
Assets Pte. Ltd.. The Board of Directors of GAPI has authority to decide how the POPI shares will be
voted. At present, GAPI lodged its 451,256,180 POPI shares with PCD. The POPI shares will be
voted in accordance with the instructions of GAPI’s proxy.
**GIC is wholly-owned by Treasure-House Holdings Corporation (THHC), which is 40%-owned by Mr.
Yuen Po Seng and his wife. (Aside from the 250 million POPI shares registered in GIC’s name, GIC
has 17,954,037 POPI shares lodged with DGSC, for a total equity of 11.32% in POPI.) The GIC Board
of Directors has the power to decide how the POPI shares will be voted.
***F.Yap Securities, Inc. holds the POPI shares in trust for its clients/beneficial owners and will vote the
POPI shares in accordance with the instructions of such beneficial owners.
****The Board of Directors of Lepanto Mining has the power to decide how the POPI shares will be
voted.
Common
(b) Security Ownership of Management
(as of 30 September 2012)
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 36
Title of Class
Common
Common
Common
Common
Common
Common
Common
Common
C.
Name of Beneficial
Owner
Felipe U. Yap
David C. Go
Yuen Po Seng
Victor C. Say
Ricardo J. Romulo
Daisy L. Parker
Ronald P. Sugapong
Ma. Rhodora P. dela
Cuesta
Total Holdings of
Directors &
Executive Officers
Amount and Nature of
Beneficial ownership
3,010,000 shares (d)
22,200,000
(d/i)
1
(d)
23,500,000
(d/i)
1
(d)
283,400
(d)
85,429
(d/i)
111,450
(d)
Citizenship
Filipino
Filipino
Malaysian
Filipino
Filipino
Filipino
Filipino
Filipino
49,190,281
Percent of
Class
0.127%
0.938%
0.993%
0.012%
0.004%
0.005%
2.079%
Voting Trust Holders of 10% or More
There are no voting trust holders of 10% or more of the common shares.
D.
Changes in Control of the Registrant since beginning of last Fiscal Year
There has been no change in control of the Registrant since the beginning of the last fiscal
year.
Item 12. Certain Relationships and Related Transactions
(1)
There has been no transaction during the last two years, or proposed transactions, to
which the Company/Registrant was or is to be a party, in which any of the following
persons had or is to have a direct or indirect material interest:
a.
Any director or executive officer of the Registrant;
b.
Any nominee for election as a director;
c.
Any security holder named in Sections 1.1 and 1.2 above; and
d.
Any member of the immediate family (including spouse, parents, children,
siblings, and in-laws) of any of the persons named in the immediately
preceding subparagraphs (1), (2) and (3).
(2)
The Company does not have a parent company as no one stockholder owns more
than 50% of the Company’s shares. As per the Company’s records as of 30
September 2012, GAPI is the beneficial owner of 451,256,181 shares representing
19.07% of the Company’s outstanding capital stock (GAPI lodged its 451,256,180
POPI shares with the PCD). GIC is the beneficial owner of 267,954,038 shares of the
Company, equivalent to 11.31% equity. (Aside from the 250 million POPI shares
registered in GIC’s name, GIC has 17,554,037 POPI shares lodged with DGSC, while
1 share was assigned to its nominee, Mr. Yuen.)
PART IV-CORPORATE GOVERNANCE
Item 13. Corporate Governance
Compliance with Corporate Governance
The Company has substantially complied with its Revised Manual of Corporate Governance
(submitted on 11 February 2011) with the election of two independent directors to the
Company’s Board of Directors. The Company has, for the last nine years, complied with the
requirement for the creation of the Audit, Compensation, and Nomination and Election
Committees and the election of the members of each committee; the regular conduct of
meetings of the Board, certification on attendance in meetings of the directors and committee
members; adherence to the written Code of Conduct/Policy Manual prepared by its Human
Resources Department, and adherence to applicable accounting standards and disclosure
requirements. Pursuant to the Revised Manual, the Audit Committee reviews the quarterly
and annual financial statements before their submission to the Board.
The Revised Manual provides in detail the qualifications and disqualifications of the Board of
Directors. The duties and functions of the directors are also provided in the Revised Manual.
The performance of the directors will be measured against the criteria established in the
Manual.
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 37
Also, in compliance with the requirements of the PSE, the Company established its official
website, www.primeorion.com, on 16 June 2008. This website is updated regularly and
contains all the corporate information on the business and management of the Group,
corporate governance reports and disclosures made by the Company.
A Full Business Interest Disclosure Form has been adopted and has been accomplished by
the directors and key officers of the Company. All the directors have attended a corporate
governance seminar. At present, the policies and procedures for the identification of potential
conflicts of interest involving the Company’ directors and officers are being developed.
The Company and its operating subsidiaries prepare and adhere to their respective business
plans, budget and marketing plans. The Management prepares and submits to the Board, on
a regular basis, financial and operational reports which enable the Board and Management to
assess the effectiveness and efficiency of the Company and its operating subsidiaries.
Pursuant to the requirements of the SEC, the Company’s Corporate Secretary/Compliance
Officer submitted to the SEC the required yearly certification on the extent of compliance by
the Company with its Revised Manual (SEC Form MCG-2002). The Company has included
as part of its Revised Manual, the adoption of the SEC Corporate Governance Scorecard for
evaluation of its compliance with the Revised Manual, and the annual submission of the CG
Scorecard to the SEC.
On 3 October 2012, the Company approved its Audit Committee Charter and Assessment
Performance Self-Rating Form in accordance with the SEC Memorandum Circular No. 4,
Series of 2012 (Guidelines for the Assessment of the Performance of Audit Committees of
Companies Listed on the Stock Exchange).
There were no major deviations to the Revised Manual. The Company will continue to work
on its systems and procedures to improve compliance with the Revised Manual.
PART V - EXHIBITS AND SCHEDULES
Item 14. Exhibits and Reports on SEC Form 17-C
(a)
Exhibits
See accompanying Index to Exhibits
(b)
Reports on SEC Form 17-C
During the period covered by this report, the reports on Form 17-C (Current Report) filed with
the SEC cover the following:
(i)
Approval by the Board of Directors of the Company’s Audited Financial Statements
for Fiscal Year Ended 30 June 2011; setting of the annual stockholders’ meeting of
the Company on 22 November 2011 and the record date for stockholders entitled to
vote thereat on 10 October 2011. Validation of proxies was set on 17 November
2011. The information on the time, venue and agenda for the meeting was also
included in this report (20 September 2011);
(ii)
Election of the directors of the Company for fiscal year 2011-2012 (including the
independent directors), election of the officers of the Company for 2011-2012,
appointment of the Compliance Officer/Committee Members under the Company’s
Manual on Corporate Governance and the Compliance Officer as required under the
Company’s Anti-Money Laundering Manual (22 November 2011); and
(iii)
Filing by Lepanto Ceramics, Inc. (an indirect subsidiary of the Company), of a Petition
for Rehabilitation with the Regional Trial Court of Calamba City pursuant to Republic
Act No. 10142, otherwise known as the Financial Rehabilitation and Insolvency Act of
2010, with the following objectives: (i) arrest the continuing losses for the past several
years; (ii) ensure the continuing delivery of suppliers; (iii) give LCI the chance to
rebuild business by utilizing its cash flow directly for operations; and (iv) service
obligation with creditors (23 December 2011).
Pime Orion Phi,ip4ne€.,
SEC Form 174
tnc.
Page 38
PART V - EXHIBITS AiID SCHEDULES
Item 14. Exhabib and Reports on SEC Fonn 17-C
(a)
See accompanying lndex to Exhibits
(b)
Reports on SEC Form 17-C
During the period covered by this report, the reports on Form 17-C (Current Report) filed with
the SEC cover the follolring:
0
Approval by the Board of Directors of the Company's Audited Financial Statements
for Fiscal Year Ended 30 June 2011; setting of the annual stoc*holders' meeting of
the Company on 22 November 2011 and the record date for stckholders entitled to
vote thereat on 10 October 2011. Validation of proxies was set on 17 November
20fi. The inbrmation on the time, venue and agenda for the meeting was also
induded in this report (20 September 2011);
(ii)
Election of the directors of the Company for fiscal year 2011.2A12 (including the
independent directors), election of the offcers of the Company for 201t2A12,
appointment of the Compliance QfficerlCommittee Members under the Companfs
Manual on Corporate Govemance and the Compliance Oficer as required under the
Company's Anti-Money Laundering Manual (22 November 2011); and
(iii)
Filing by Lepanto Ceramics, lnc. (an indirect subsidiary of the Company), of a Petition
for Rehabilitation with the Regional Trial Court of Calamba Cig pursuant to Republic
Act No. 10142, othenrise known as the Financial Rehabilitation and lnsolvency Ac't of
2Q10, with the bllalving abjeative$: (i) anest he continuing lqsses &r he past *veral
years; (ii) ensure the continuing delivery of suppliers; (iii) give LCI the chance to
rebuild business by utilizing its cash flour directy for operations; and (iv) seMce
obligation with creditors (23 December 2011).
SIGTTIATURES
Pursuant to the requirements of Sec*ion 17 of Ure Code and Sec{ion 141 of the Corporation
Code, this report to be signed on behalf of the issuer by the undersigned, thereunto duly
auhorized, in the Ci$ of Makati on 25 October2012.
PRItrE ORlOil PHILIPPINES, INC.
lssuer
By:
YUEN PO SENG
L.
Corporate
RIBED AllD SWORN to before me this 25th day of October 2AiZ, at Makati
City, affiants exhibited to me their pqssports as competent evidence of their identities, as
follows:
Names
Comoetent Evid. of ldentitv
Date/Place of lssue
Yuen Po Seng
Ronald P. Sugapong
Daisy L. Parker
Ppt No. A25169994
Ppt No. XX1614462
Ppt No. E81284390
1 G2.$201 1 lceorgetown, Malaysia
7-1S2008/Manila
11-}2O1U Manila
Doc'
No' rfu
ATTY. HO
:
PaoeNo.Sl.
JL
Series of 2A12.
eoir
ruo.
NOTA
Until Dacemlar
Appt. No. M-521,
,,*' *? fqF
$#
{1/2gtg
9itv
.i,1*3;i;,*ih*,
Unit 6E Citytand Tcwer, *eB nufino St..
cOr. Valero $1,, $alc,edo Vill.. Makari
citir
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 39
PRIME ORION PHILIPPINES, INC.
Index to Financial Statements and Supplementary Schedules
Form 17-A, Item 7
---------------------------------------------------------------------------------------------------------------------------Consolidated Financial Statements
Page No.
Statement of Management’s Responsibility for Financial Statements .
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Financial Position as of June 30, 2012
and June 30, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for the Years Ended 2012, 2011
and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the Years
Ended 2012, 2011 and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Equity (Capital Deficiency) .
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . .
40
41-42
43-44
45
46
47-48
49-50
51-103
Supplementary Schedules
Report of Independent Public Accountants on Supplementary Schedules 104
Schedule I: Reconciliation of Retained Earnings Available for
Declaration
.............................
Schedule II: Financial Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule III: Map of the Relationships of the Companies Within the
Group
....................................
Schedule IV: Tabular Schedule of the Effective Standards and
Interpretations Under the PFRS . . . . . . . . . . . . . . . . . . .
Schedule V: Supplementary Schedules Under Annex 68-E
A.
B.
C.
D.
E.
F.
G.
H.
Financial Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts Receivable from Directors, Officers, Related Parties
and Principal Stockholders (Other than Affiliates) . . . . . . . . . .
Amounts Receivable from Related Parties which are
Eliminated During Consolidation of Financial Statements . . . . .
Intangible Assets-Other Assets . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indebtedness to Affiliates and Related Parties (Long-Term
Loans from Related Companies) . . . . . . . . . . . . . . . . . . . . . . . .
Guarantees of Securities to Other Issuers . . . . . . . . . . . . . . . . .
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
105
106
107
108-111
112
113
114
115
N.A.
N.A.
N.A.
116
Pime Odon Philipphreg lnc.
SEC Form 17-A
Page 40
PrimeOrion Philippines,
lnc.
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
F'OR
FINAIICIAL STATEMENTS
The management of PRIME ORION PEILIPPINES, INC. is responsible for the preparation and fair
presentation of the consolidated financial statements for the fiscal years ended June 30,2012 and20ll,
including the additional components attached therein, in accordance with Philippine Financial Reporting
Standards" This responsibility includes designing and implementing intemal controls relevant
to
the
preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error, selecting and applying appropriate accounting policies, and making accounting
estimates that are reasonable in the circumstances.
The Board of Directors reviews and approves the consolidated financial statements and submits the same
to the stoclfiolders of the Company.
SYCP GORRES VELAYO & CO., the independent auditors appointed by the Board of Directors and
Stoclfiolders, has examined the consolidated financial statements of the Company and its subsidiaries in
on the faimess ofpresentation upon completion of such examinatj/n.
AP
ofthe Board
YTIEN PO SENG
President/Chief Executive Officer
Signed this 3d day of October 2Ol2
il?,*;'s,$*ttt*t"u,r.r.
. zxt}{L
-" *.SS l,
suBscRIBED AND swoRN to before
of october 2012, at Makati City, affiants
exhibited to me their passports as competent of their identities, as follows:
Name
Competent Evidence of Identity
FelipeU. Yap
Ppt No. W\M0232536
Yuen Po Seng
Ronald P" Sugapong
PptNo.Al8l47487
Subang Malaysia
PptNo. )C(1614462
/Manila
DateiPlace iszued
9-26-2007 /lN.{:anila
WITNESS MY HAND AND SEAL on the date and at the place
H;i,z;W
ATTY.
B;kNo.Ff)a
Series of
written"
z6Tz17
20lF LKG Tower, 6801 Ayolo Avenue, Mokoli City, Phrlrppines 1226
Tel.
No.:884-l106
Fox No.:
884-1409 Emoil Add.: [email protected]
t',Tl,I*
1uz3,otJli.
-1[
Ivtr.:;ed n."n,
r,1i1
ror L'rLaa A;e., urgy.
;"
i, ro,,
;#;i'
d.j ,,ii;;.",ri.r.u ory
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 43
PRIME ORION PHILIPPINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in Thousands, Except Par Value and Number of Shares)
June 30
2012
2011
(As restated)
Current Assets
Cash and cash equivalents (Note 4)
Receivables (Note 5)
Inventories (Note 6)
Real estate held for sale and development (Note 7)
Amounts owed by related parties (Note 18)
Available-for-sale (AFS) investments (Note 8)
Other current assets (Note 9)
Total Current Assets
P
=544,601
509,115
198,732
300,679
1,023
427,411
196,293
2,177,854
=386,654
P
665,239
287,593
300,596
1,033
433,203
184,276
2,258,594
Noncurrent Assets
Investments in associates (Note 10)
Leasehold rights (Note 25)
Held-to-maturity (HTM) investments (Note 11)
Investment properties (Note 12)
Property, plant and equipment (Note 13)
Other noncurrent assets (Note 14)
Total Noncurrent Assets
531,026
13,165
2,000
768,288
735,675
118,947
2,169,101
530,931
22,092
2,000
753,763
655,103
149,660
2,113,549
P
=4,346,955
=4,372,143
P
P
=1,142,329
206,321
2,727
1,351,377
=1,393,216
P
205,921
2,752
1,601,889
61,825
173,390
528,470
763,685
2,115,062
68,077
134,291
528,470
730,838
2,332,727
ASSETS
TOTAL ASSETS
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses (Note 15)
Rental and other deposits (Note 16)
Amounts owed to related parties (Note 18)
Total Current Liabilities
Noncurrent Liabilities
Retirement benefits liability (Note 21)
Deferred income tax liabilities - net (Note 22)
Subscriptions payable (Note 10)
Total Noncurrent Liabilities
Total Liabilities
(Forward)
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 44
June 30
Equity Attributable to Equity Holders of the Parent
Capital stock - =
P1 par value
Authorized - 2,400,000,000 shares
Issued and subscribed - 2,367,149,383 shares
(net of subscriptions receivable of =
P300,792 and
=300,797 as at June 30, 2012 and 2011, respectively)
P
Additional paid-in capital
Revaluation increment on property, plant and equipment
(Note 13)
Unrealized valuation gain on AFS investments (Note 8)
Deficit
Non-Controlling Interests
Total Equity
TOTAL LIABILITIES AND EQUITY
See accompanying Notes to Consolidated Financial Statements.
2012
2011
(As restated)
P
=2,066,357
829,904
=2,066,352
P
829,904
261,017
63,035
(1,073,928)
2,146,385
85,508
2,231,893
P
=4,346,955
188,170
52,432
(1,172,114)
1,964,744
74,672
2,039,416
=4,372,143
P
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 45
PRIME ORION PHILIPPINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Earnings Per Share)
2012
REVENUE
Merchandise sales - net
Rental (Note 12)
Insurance premiums and commissions
Real estate sales
COSTS AND EXPENSES
Cost of goods sold and services (Note 19)
Operating expenses (Note 19)
Rent and utilities (Note 25)
Insurance underwriting deductions
Cost of real estate sold
OTHER INCOME (CHARGES)
Gain on sale of assets (Notes 8, 12 and 13)
Reversal of probable losses
Interest and others - net (Note 20)
Foreign exchange gains (losses) - net
Dividend income (Note 8)
Equity in net income of associates (Note 10)
Recovery of allowance for impairment losses on
receivables (Note 5)
Gain on extinguishment of debt (Note 17)
Others - net
INCOME BEFORE INCOME TAX
PROVISION FOR INCOME TAX - net (Note 22)
NET INCOME
ATTRIBUTABLE TO:
Equity holders of the Parent
Non-controlling interests
EARNINGS PER SHARE (Note 23)
Basic and diluted, for income for the year attributable
to ordinary equity holders of the Parent
See accompanying Notes to Consolidated Financial Statements.
Years Ended June 30
2011
2010
P
=490,406
491,477
192,729
–
1,174,612
=639,918
P
505,242
184,385
–
1,329,545
=
P703,625
498,555
147,271
72,296
1,421,747
484,955
403,501
246,086
137,118
–
1,271,660
612,051
410,811
227,567
126,231
–
1,376,660
655,242
465,823
221,303
113,351
49,021
1,504,740
112,210
44,944
28,272
6,119
941
95
240,200
19,340
16,190
(4,234)
14,414
176
–
–
29,251
221,832
36,628
–
22,493
345,207
8,559
1,544,914
31,853
2,056,651
124,784
298,092
1,973,658
24,237
24,983
22,333
P
=100,547
=273,109
P
=
P1,951,325
P
=93,057
7,490
P
=100,547
=266,683
P
6,426
=273,109
P
=
P1,953,964
(2,639)
=
P1,951,325
=0.11
P
P
=0.83
P
=0.04
420,127
–
21,453
6,971
22,540
234
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 46
PRIME ORION PHILIPPINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands)
2012
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized valuation gains (losses) on AFS
investments (Note 8)
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Equity holders of the Parent
Non-controlling interests
See accompanying Notes to Consolidated Financial Statements.
P
=100,547
98,569
Years Ended June 30
2011
2010
=273,109
P
(24,817)
=
P1,951,325
198,350
P
=199,116
=248,292
P
=
P2,149,675
P
=188,280
10,836
P
=199,116
=240,475
P
7,817
=248,292
P
=
P2,151,053
(1,378)
=
P2,149,675
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 47
PRIME ORION PHILIPPINES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED JUNE 30, 2012, 2011 AND 2010
(Amounts in Thousands)
Attributable to Equity Holders of the Parent
Balances at June 30, 2009, as previously restated
Effect of transfer of revaluation reserve on investment
properties to deficit (Note 12)
Capital Stock
Additional
Paid-in
Capital
P
=2,066,352
=
P829,904
Revaluation
Increment on
Property,
Plant and
Equipment
(Note 13)
=
P198,428
Unrealized
Revaluation
Reserve on
Valuation
Investment Gains (Losses) on
Properties AFS Investments
(Note 8)
(Note 12)
=
P235,889
(P
=8,709)
–
–
829,904
198,428
–
Net income (loss)
Other comprehensive income:
Unrealized valuation gain on AFS investments
–
–
–
–
–
–
–
–
197,089
–
Total comprehensive income (loss)
Unrealized gain transferred from equity to consolidated
statement of income
Revaluation increment on property, plant and
equipment, net of tax
Acquisition of non-controlling interests
–
–
–
–
197,089
1,953,964
(1,378)
–
–
–
–
–
–
(2,247)
–
–
–
–
5,129
–
–
(2,526)
–
(2,526)
2,066,352
829,904
–
–
–
Balances at June 30, 2010, as restated
Net income
Other comprehensive income (loss)
Unrealized valuation gain (loss) on AFS investments
Total comprehensive income (loss)
Revaluation increment on property, plant and
equipment, net of tax
Unrealized gain transferred from equity to consolidated
statement of income
Balances at June 30, 2011, as restated
(Forward)
(8,709)
–
(2,247)
–
–
–
–
193,299
–
186,133
–
–
–
–
–
–
–
–
–
–
–
(5,129)
235,889
–
Total
(P
=246,285)
–
(5,129)
–
–
=
P70,759
2,066,352
Balances at June 30, 2009, as restated
(235,889)
Deficit
(P
=3,638,908)
NonControlling
Interests
(3,403,019)
70,759
1,953,964
(2,639)
1,951,325
198,350
2,149,675
66,855
1,898,617
266,683
6,426
273,109
(26,208)
–
1,391
(24,817)
–
(26,208)
266,683
7,817
248,292
–
–
5,129
–
–
–
–
–
–
(107,493)
P
=2,066,352
=
P829,904
=
P188,170
=
P–
=
P52,432
(1,443,926)
1,261
–
(246,285)
–
(P
=1,172,114)
–
=
P74,672
(107,493)
=
P2,039,416
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 48
Attributable to Equity Holders of the Parent
Revaluation
Increment on
Property,
Plant and
Equipment
(Note 13)
Unrealized
Revaluation
Valuation
Reserve on
Investment Gains (Losses) on
Properties AFS Investments
(Note 8)
(Note 12)
NonControlling
Interests
Total
=
P74,672
=
P2,039,416
7,490
100,547
Capital Stock
Additional
Paid-in
Capital
P
=2,066,352
=
P829,904
=
P188,170
=
P–
=
P52,432
Net income
Other comprehensive income
Unrealized valuation gain on AFS investments
–
–
–
–
–
–
–
–
–
95,223
–
3,346
98,569
Total comprehensive income
Issuance of capital stock
Unrealized gain transferred from equity to consolidated
statement of income
Revaluation increment on property, plant and
equipment, net of tax
–
5
–
–
–
–
–
–
95,223
–
93,057
–
10,836
–
199,116
5
–
–
–
–
(84,620)
–
–
(84,620)
–
–
72,847
–
–
5,129
–
77,976
=
P2,066,357
=
P829,904
=
P261,017
=
P–
=
P63,035
=
P85,508
=
P2,231,893
Balances at June 30, 2011, as restated
Balances at June 30, 2012
See
accompanying
Notes
to
Consolidated
Deficit
(P
=1,172,114)
93,057
(P
=1,073,928)
Financial
Statement
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 117
INDEX TO EXHIBITS
Form 17 - A
---------------------------------------------------------------------------------------------------------------------------Exhibit Number
Page No.
(3)
Plan of Acquisition, Reorganization, Arrangements, Liquidation or
Succession
*
(5)
Instruments Defining the Rights of Security Holders, including Indentures
*
(8)
Voting Trust Agreement
*
(9)
Material Contracts
*
(10) Annual Report to Security Holders, Form 17-Q or Quarterly Report to
Security Holders
*
(13)
Letter re Change in Certifying Accountant
*
(16)
Report Furnished to Security Holders
*
(18)
Subsidiaries of the Registrant
(19)
Published Report regarding Matters Submitted to Vote of Security
Holders
*
(20)
Consent of Experts and Independent Counsel
*
(21)
Power of Attorney
*
(29)
Additional Exhibit
*
* These Exhibits are either not applicable to the Company or require no answer.
118
Prime Orion Philippines, Inc.
SEC Form 17-A
Page 118
Exhibit (18)
Subsidiaries of the Registrant
---------------------------------------------------------------------------------------------------------------------------As of 30 June 2012, POPI has the following wholly-owned subsidiaries:
*inactive
Name
Jurisdiction
Orion Land Inc.
Tutuban Properties, Inc.
TPI Holdings Corporation.
Orion Property Development, Inc.
Orion Beverage, Inc.
22Ban Marketing, Inc.*
Orion I Holdings Philippines, Inc.
Lepanto Ceramics, Inc.
Orion Solutions, Inc.
OE Holdings, Inc.
Orion Maxis Inc.
Philippines
Philippines
Philippines
Philippines
Philippines
Philippines
Philippines
Philippines
Philippines
Philippines
Philippines