The Securities and Exchange Commission (SEC) has denied the request for reconsideration submitted by NOW Corp. and its CEO Mel Velarde regarding its noncompliance to SEC rules.

This was about NOW Telecom Company Inc.'s alleged unpaid liabilities to the government worth P2.6 billion.

The rejection order, issued on Feb. 16, 2023, denied their request for "lack of merit," and upheld the P2 million fee imposed on NOW Corp. and Velarde for being "administratively liable for violating Section 24.1(d) in relation to Section 54.1 of the Securities Regulation Code (SRC)."

Back in Nov. 10, 2021, NOW Corp. disclosed to the Philippine Stock Exchange (PSE) that it "has no knowledge of the details surrounding the Motions filed by the National Telecommunications Commission (NTC) through the Office of the Solicitor General regarding the P2.6 billion liability representing unpaid Supervision and Regulation Fees and Spectrum User Fees of NOW Telecom Company, Inc."

NOW Telecom is NOW Corp.'s main mobile telecommunications business unit.

On June 15, 2023, the SEC-Enforcement and Investor Protection Department (EIPD) issued an order against the company and its head for "failing to disclose material information to the public," directing them to pay P1 million each.

NOW Corp. submitted their request for reconsideration on July 3, 2023, contesting the order.

The SEC said the company and Velarde "cannot simply deny that they were unaware of the details surrounding the Motion filed by the NTC.”

“To be simply dismissive about it and to nonchalantly disclose that ‘The company has no knowledge of the specific details surrounding the alleged Motion field by the [NTC]...’ created a misconception to the investing public,” stated the Commission.

“In this connection, it is clear that there was concomitant failure on the part of NOW Corp. and Mr. Velarde to make full, accurate and timely disclosure of a material fact or information about securities as mandated compliance to a listed company constitute a violation of Section 24.1 (d) of the Securities Regulation Code,” it added.

Regarding NOW Corp. and Velarde's claims that the disclosure of details about the NTC motion would violate the sub judice rule, the SEC said NOW "need not necessarily give its comment and disclosure regarding the Motion pending with the Supreme Court."

Sub judice rule, it explained, is the prohibition of giving comments and disclosures pending judicial proceedings.

“What is required of NOW to disclose are ‘relevant information not reported in the news article’ which encompasses ‘financial results and other information which is material to investor's decision.’ Hence, we do not find any application of the sub judice rule in this particular case," it added. 

Update: In response to the denial of their request, NOW Corp released a disclosure on Feb. 22, stating that "the Company disagrees with the Orders of the EIPD and has referred the matter to its legal counsel to appeal the same to the SEC en banc."