Majestic Plus International, Inc. vs.
Bullion Investment and Development Corporation On August 22, 2011, Majestic filed a Motion for Execution Pending Appeal which was granted by
Case Digest
Majestic Plus International, Inc. vs. Bullion Investment and Development
Corporation/Majestic Plus International, Inc. Vs. Bullion Investment and Development
Corporation, et al.
G.R. No. 201017/G.R. No. 215289. December 5, 2016
Facts
On June 30, 2003, the City of Manila, through then City Mayor Joselito Atienza, and Bullion,
represented by its President Roland Lautachang, entered into a Contract for the lease of the
said property for a period of twenty-five (25) years. Under the Contract, Bullion, as lessee,
agreed to construct two 4-storey buildings, one of which shall be used as an extension office of
the Manila City Hall for its institutional services, while the other shall be used for commercial
purposes.
Bullion then commenced construction and was able to finish and turn over the City Hall
extension building to the Manila City Government. However, Bullion was unable to finish the
construction of the commercial building. Bullion then sought the help of and was able to
convince petitioner corporation, Majestic Plus Holding International, Incorporation (Majestic), to
invest in Bullion's business venture, particularly the completion of the construction of its
commercial building which was intended to be used as a mall (Meisic Mall).
On September 7, 2004, Bullion, represented by its President, entered into a Memorandum of
Agreement6 (MOA) with Majestic. Following the execution of the MOA, Majestic issued five (5)
checks, on various dates, for an aggregate amount of Fifty-Seven Million Pesos (P57
,000,000.00) in favor of Bullion, as partial payment of the 80% equity interest in the latter. Bullion
acknowledged such payment. However, it alleged that an additional four ( 4) checks,
representing a total amount of P31,000,000.00, which were subsequently issued by Majestic
were dishonored because of "Stop Payment" orders. For Majestic's failure to heed Bullion's
demands, the latter sent another letter to the former, dated June 24, 2005, informing it that
Bullion had elected to rescind the MOA.
Meanwhile, Majestic took over the supervision and eventually finished the construction of the
Meisic Mall, except with respect to some minor installations. Based on the Summary of
Payments, Majestic claims that, aside from the P57,000,000.00 it had earlier paid to Bullion, it
also incurred expenses for the purpose of sustaining the construction of Meisic Mall and the
acquisition of various equipment for use inside the mall in the sum Pl34,522,803.22. Thus, the
aggregate amount alleged to have been invested by Majestic is P191,522,803.22.
The Meisic Mall became operational as early as May 2005. Majestic conducted business therein
by renting out the mall's leasable spaces to stallholders and by employing personnel for the
security, maintenance and upkeep of the mall's premises. However, in the morning of June 25,
2005, respondent, aided by several police personnel and security guards, entered the premises
and took physical possession and control of Meisic Mall.
This prompted Majestic to file a Complaint for Specific Performance, Injunction and Damages
with a Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction against
Bullion, together with several other persons. Majestic alleged that it has become a majority
shareholder of Bullion by reason of its P 191,522,803.22 investment, which comprises 95.76% of
the agreed P200,000,000.00 authorized capital stock of Bullion. Majestic also claims that the
subject MOA remains valid and binding and that Bullion failed to comply with its unde1iakings
thereunder.
The executive judge assigned the same to Branch 46, RTC of Manila which is also a commercial
court. The parties did not question the jurisdiction of Branch 46. In the ensuing proceedings
before Branch 46, the parties jointly moved that the case be submitted for summary judgment, to
which the RTC acceded. On July 28, 2011, Branch 46, RTC of Manila rendered a Decision in
favor of the plaintiff Majestic Plus Holding International, Inc. and against the herein defendants.
the RTC by vi11ue of a Special Order and two other related orders, all dated September 1,
2011. Consequently, a Writ of Execution Pending Appeal on even date was issued. Per Sheriffs
Return dated September 2, 2011, the Writ was served on Bullion and was thereby immediately
implemented. In accordance with the Writ, the Sheriff was able to completely and successfully
remove the physical possession and control of Meisic Mall from Bullion and deliver the same to
Majestic.
Bullion filed a Petition for Certiorari before the CA which granted the aforesaid Petition and
annulled and set aside the Special Order and the two (2) other assailed Orders. Hence, this
petition.
Issues:
1. Whether Branch 46, RTC of Manila, despite being designated as an SCC, has
jurisdiction to hear and decide Majestic's suit for specific performance.
2. Whether RTC was correct in considering the case appropriate for summary judgment.
3. Whether the execution of such Decision pending appeal was proper.
Rulings:
1. Yes. The matter of whether the RTC resolves an issue in the exercise of its general
jurisdiction or of its limited jurisdiction as a special court is only a matter of procedure and has
nothing to do with the question of jurisdiction.
Moreover, it should be noted that Special Commercial Courts (SCCs) are still considered courts
of general jurisdiction. Section 5.2 of R.A. No. 8799, otherwise known as The Securities
Regulation Code, directs merely the Supreme Court's designation of RTC branches that shall
exercise jurisdiction over intra-corporate disputes. The assignment of intra-corporate disputes to
secs is only for the purpose of streamlining the workload of the RTCs so that certain branches
thereof like the SCCs can focus only on a particular subject matter.
Nothing in the language of the law suggests the diminution of jurisdiction of those RTCs to be
designated as SCCs. The RTC exercising jurisdiction over an intra-corporate dispute can be
likened to an RTC exercising its probate jurisdiction or sitting as a special agrarian court. The
designation of the SCCs as such has not in any way limited their jurisdiction to hear and decide
cases of all nature, whether civil, criminal or special proceedings.
Hence, based on the foregoing, it is clear that Branch 46, RTC of Manila, despite being
designated as an SCC, has jurisdiction to hear and decide Majestic's suit for specific
performance.
2. No. Summary judgment is a procedural device resorted to in order to avoid long drawn out
litigations and useless delays. Relief by summary judgment is intended to expedite or promptly
dispose of cases where the facts appear undisputed and certain from the pleadings, depositions,
admissions and affidavits. Summary judgments are proper when, upon motion of the plaintiff or
the defendant, the court finds that the answer filed by the defendant does not tender a genuine
issue as to any material fact and that one party is entitled to a judgment as a matter of law. But if
there be a doubt as to such facts and there be an issue or issues of fact joined by the parties,
neither one of them can pray for a summary judgment. Where the facts pleaded by the parties
are disputed or contested, proceedings for a summary judgment cannot take the place of a trial.
In the present case, it is true that both parties moved for the rendition of a summary judgment.
However, it is apparent that the RTC did not comply with the procedural guidelines when it
ordered that the case be submitted for summary judgment without first conducting a hearing to
determine if there are indeed no genuine issues of fact that would necessitate trial. The trial
court merely required the parties to submit their respective memoranda, together with their
affidavits and exhibits and, although the parties presented opposing claims, the RTC hastily
rendered a summary judgment. Thus, the trial court erred in cursorily issuing the said judgment.
A careful examination of the pleadings will show that Majestic's causes of action in its Complaint
are anchored on Bullion's supposed violations of the provision of the subject MOA. On the other
hand, Majestic's allegations are controverted by Bullion who, in a like manner, asserts that by
virtue of Majestic's failure to comply with the provisions of the said MOA, it decided to rescind
the same. These diametrically opposed and conflicting claims present a factual dispute which
can be resolved and settled only by means of evidence presented during trial. On the basis of
the foregoing, it is clear that the RTC erred in rendering its assailed summary judgment. Thus,
the CA did not commit error in setting aside the said summary judgment.
3. No. In view of this Court's affirmance of the CA ruling which reversed and set aside the July
28, 2011 Decision of the RTC, there is no longer any RTC judgment that may be executed.
Hence, the issue as to whether or not there are "good reasons" to execute the assailed Decision
of the RTC has become moot and academic.
WHEREFORE, the instant petitions are DENIED. The November 2, 2011 Decision and March
14, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 121072 are AFFIRMED. The
October 23, 2013 Decision and November 4, 2014 Resolution of the Court of Appeals in CA-
G.R. CV No. 97537 are, likewise, AFFIRMED. The Executive Judge of the Regional Trial Court
of Manila is hereby ORDERED to PROMPTLY RE-RAFFLE the case among the non-
commercial courts with a directive that the same be resolved with deliberate dispatch.
SECOND DIVISION
G.R. No. 196329, June 01, 2016
PABLO B. ROMAN, JR., AND ATTY. MATIAS V. DEFENSOR, AS OFFICERS OF THE
CAPITOL HILLS GOLF AND COUNTRY CLUB, INC., Petitioners, v. SECURITIES AND
EXCHANGE COMMISSION, ATTY. FRANKLIN I. CUETO, ATTY. EMMANUEL Y. ARTIZA
AND MANUEL C. BALDEO, AS MEMBERS OF THE MANAGEMENT COMMITTEE; JUSTINA
F. CALLANGAN, AS DIRECTOR OF THE CORPORATION FINANCE DEPARTMENT; ATTY.
NARCISO T. ATIENZA, EUSEBIO A. ABAQUIN, ATTY. CLODUALDO C. DE JESUS, SR.,
ATTY. CLODUALDO ANTONIO R. DE JESUS, JR., ATTY. IRENEO T. AGUIRRE, JR.,
SUNDAY O. PINEDA, PORFIRIO M. FLORES, AND ATTY. ZOSIMO PADRO, JR.,
Respondents.
DECISION
MENDOZA, J.:
This petition1 for review on certiorari under Rule 45 of the Rules of Court seeks to review and
reverse the November 30, 2010 Decision2 and the March 15, 2011 Resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 101613, which dismissed the petition for prohibition filed by
petitioners Pablo B. Roman, Jr. (Roman) and Atty. Matias V. Defensor (Defensor), President and
Corporate Secretary, respectively, of Capitol Hills Golf and Country Club, Inc., (Capitol). The
said petition before the CA questioned the jurisdiction of respondent Securities and Exchange
Commission (SEC) for acting upon the letter-complaint,4 dated May 8, 2007, filed by the minority
shareholders of Capitol and for issuing its December 5, 2007 Order5 creating the Management
Committee (MANCOM) tasked to oversee the affairs of the said company.
Factual Antecedents
On June 6, 2007, private respondents Atty. Narciso T. Atienza, Eusebio A. Abaquin, Atty.
Clodualdo C. De Jesus, Sr., Atty. Clodualdo Antonio R. De Jesus, Jr., Atty. Ireneo T. Aguirre, Jr.,
Sunday O. Pineda, Porfirio M. Florez, and Atty. Zosimo Padro, Jr. (private respondents) filed a
verified letter-complaint against the petitioners before the SEC.
In their letter-complaint, private respondents alleged that on April 23, 1996, a Special Board of
Directors Meeting was held and, thereafter, a resolution was passed by the Board of Directors of
Capitol (Board) authorizing Roman, as its President:chanRoblesvirtualLawlibrary
(a) To acquire for and in behalf of the corporation four (4) parcels of land located at Montalban,
Rizal xxx for a consideration of ONE HUNDRED FIFTY PESOS (P150.00) per sq. m. xxx;
(b) To enter for and in behalf of the corporation [Capitol] into a Joint Venture Agreement with ALI
[Ayala Land Inc.] for the purpose of (1) having ALI develop and market the area occupied by the
first nine (9) holes of the existing golf course of the corporation into saleable lots in consideration
of the payment to the corporation of a forty percent (40%) share in the proceeds of the sale of
such lots (NET OF TAXES AND DISCOUNTS); and (2) granting to ALI the right to develop the
Properties into a first class golf course;
(c) For the purpose of acquiring the Properties, to obtain loans from ALI for the purpose of
acquiring the Montalban properties up to an aggregate amount of One Hundred Fifty Million
(P150,000,000.00) to be secured by (a) real estate mortgage on the properties; and (b)
assignment of the proceeds to be paid in connection with the Joint Venture for the development
of the first nine (9) holes of the existing golf course of the corporation and under the Deed of
Absolute Sale, dated April 10, 1992, between ALI and the Corporation covering the sale of the
former driving range of the corporation to ALI under such terms, payment scheme and
conditions as the President may deem reasonable and necessary under the circumstances;
(d) To (1) negotiate, agree to terms of, execute, sign and deliver the following agreements: (a) A
letter-agreement with ALI embodying the foregoing terms; (b) A deed of sale for the purchase of
the Properties; (c) Joint Venture Agreement with ALI covering the first nine (9) holes of the
existing golf course of the corporation; (d) Promissory Notes, real estate mortgages and
assignment agreements in favor of ALI; and (e) such other documents and agreements related
to or in connection with the transactions contemplated in this resolution and (2) to do any and all
acts necessary and appropriate to carry this resolution into effect.6cralawred
It was further alleged that Roman also asked the Board to pass a resolution authorizing a third-
party, Pacific Asia Capital Corporation (Pacific Asia), to receive from Ayala Land, Inc. (ALI) the
proceeds of the loan, or any portion thereof, and ALI to cause the release of the proceeds of the
aforesaid loan, or any portion thereof, to Pacific Asia, and that any release by ALI and receipt by
Pacific Asia be deemed a valid release and receipt of such amount;7 that the issued resolutions
were erroneously made;8 that in evident bad faith, Roman, as President of Capitol, never
informed the Board that, at the time he made the proposals and before the resolutions were
issued, ALI had already made substantial initial cash advance in favor of Capitol but directly
payable to Pacific Asia;9 that ALI had no legal basis to make cash advances as Roman had no
authority yet to enter into any agreement with ALI; that part of the representations made by
Roman was that ALI would not commence the conversion of the area occupied by the first nine
(9) holes of the existing golf course of Capitol in Old Balara, Quezon City, until such time that
one (1) 18 hole golf course of the promised two (2) championship golf courses in Macabud,
Montalban, Rizal, would have been finished and playable; and that after more than ten (10) long
years, no golf course existed or was even under construction in Macabud, Montalban, Rizal, and
yet the Old Balara property had already been converted and developed into a residential
subdivision called the Ayala Hillside Estate.10ChanRoblesVirtualawlibrary
To private respondents, all these were irregularities and anomalies amounting to fraud and
misrepresentation that prompted them to ask the SEC to investigate the Board and to order the
constitution of the MANCOM to temporarily oversee the affairs of Capitol.
The said complaint was then docketed as SEC Case No. 169, series of 2007.
In its letter11 to Roman, dated July 3, 2007, the SEC informed him of the verified complaint and
gave him 15 days upon receipt to file his answer to the said complaint.
In their Answer,12 the petitioners invoked the SEC's lack of jurisdiction claiming that the
complaint of private respondents involved an intra-corporate controversy. Accordingly, they
argued that under the Securities Regulation Code (SRC), jurisdiction over such intra-corporate
controversies should be with the Regional Trial Court (RTC) acting as special commercial court.
In its December 5, 2007 Order,13 the SEC, after finding merit in the arguments presented in the
complaint, composed the membership of the MANCOM pursuant to its authority under Section 5
of the SRC and Presidential Decree (P.D.) No. 902-A. Thus:chanRoblesvirtualLawlibrary
Pursuant to Section 5 of the Securities Regulation Code and Presidential Decree No. 902-A, as
amended, and finding merit in the arguments presented for the creation of a Management
Committee (Mancom) for Capitol Hills Golf and country Club, as prayed for by the Petitioners in
their letter dated May 08, 2007, the following are hereby designated to compose the Mancom of
the aforenamed corporation:chanRoblesvirtualLawlibrary
Atty. Franklin I. Cueto - Chairman
Atty. Noel Y. Artiza - Member
Mr. Manuel Baldeo, Jr. - Membercralawred
to perform the following duties and functions, for a period of one (1) month from the date of
receipt of this Order, and until further Orders from the Commission, to prevent the paralyzation
of the operations of Capitol Hills Golf and Country Club, preserve its assets and protect the
interests of the minority stockholders and other stakeholders:chanRoblesvirtualLawlibrary
(a) Oversee and supervise the activities of the Club upon turn over thereof to the
Committee;
(b) Take custody of all the assets and properties owned or held by the Club under
management;
(c) Oversee the performance of the duties and responsibilities of the management and
board of directors of the Club, in order to preserve its assets and properties; and
(d) To perform or discharge the powers and functions of the Management Committee
under Sec. 5 of Rule 9 of the Interim Rules of Procedure Governing Intra-Corporate
Controversies under R.A. 8799, insofar as may be applicable.
The above notwithstanding, the incumbent Board of Directors and Officers shall continue to
discharge their functions relative to the day to day operations of the Club and shall submit a
report to the Management Committee at such time and frequency as it may determine.
SO ORDERED.14cralawred
The MANCOM, in turn, notified the petitioners of its assumption of duties. It also ordered that
relevant documents of Capitol be made available to it.
Subsequently, the petitioners questioned the December 5, 2007 SEC order before the CA via a
petition for prohibition under Rule 65 of the Rules of Court. It asked the CA to enjoin the SEC
from conducting further proceedings and to dismiss the case and, in addition, prayed for the
issuance of a temporary restraining order and/or writ of preliminary injunction.
The Ruling of the CA
In its November 30, 2010 decision,15 the CA dismissed the petition stating that while the letter-
complaint filed by private respondents raised intra-corporate matters, the case did not
necessarily involve a controversy arising purely out of intra-corporate relations so as to deprive
the SEC of its jurisdiction. The CA pointed out that the said letter-complaint was seeking that the
SEC investigate alleged irregularities committed by the petitioners which, if found true, would
constitute serious violations of the SRC and the pertinent rules and regulations.16 Thus, the CA
concluded that private respondents were merely seeking the administrative intervention of the
SEC on a matter within its competence.
The CA agreed with the Office of the Solicitor General (OSG), representing the SEC, that the
creation of the MANCOM was authorized under SEC Memorandum Circular (MC) No. 11, Series
of 2003. The said memorandum stated that the SEC had the power "to do any and all acts to
carry out the effective implementation of the laws it is mandated to enforce, that is, constitute a
management committee; appoint receivers, issue cease and desist orders to prevent fraud or
injury to the public; and such other measures to carry out its role as a
regulator."17ChanRoblesVirtualawlibrary
In brief, the CA affirmed the power of the SEC to investigate and constitute the MANCOM
because such actions were pursuant to the administrative, supervisory and oversight powers of
the SEC over Capitol. According to the CA, no grave abuse of discretion could be attributed to
the SEC. Hence, the petition was dismissed.18ChanRoblesVirtualawlibrary
The petitioners moved for reconsideration, but their motion was denied by the CA in its March
15, 2011 resolution.
Hence, this petition.
ISSUE/S
(1) WAS TAKING COGNIZANCE OF THE LETTER- COMPLAINT FILED BY THE
PRIVATE RESPONDENTS BEYOND THE JURISDICTION OF THE SEC?
(2) WAS THE SEC ORDER CREATING THE MANCOM ISSUED IN EXCESS OF ITS
JURISDICTION?
In its Comment,19 the SEC submitted that it correctly took cognizance of the subject letter-
complaint and appointed the MANCOM to temporarily oversee Capitol. It asserted that Section 5
of the SRC authorized the SEC to assume jurisdiction over the subject matter to determine
whether the petitioners, who were officers of Capitol, violated the SRC and its implementing
rules and regulations. Lastly, the SEC justified its act in creating the MANCOM on the basis of
SEC-MC No. 11, Series of 2003, which included the constitution of such a committee as one of
its powers.
Private respondents, in their Comment/Opposition,20 stated that the SEC had retained its
administrative, regulatory and oversight powers over corporations citing Orendain v. BF Homes,
Inc.;21 that in the exercise of such powers, the SEC was justified in entertaining their letter-
complaint; and that as correctly appreciated by the CA, the letter-complaint readily showed that it
was an invocation for the SEC to exercise its mandated power/authority by conducting an
investigation on the perceived irregularities and fraudulent transactions allegedly committed by
the petitioners which, if found to be true, would constitute serious violations of the SRC and its
rules and regulations. Private respondents further argued that the creation of the MANCOM was
justified under SEC-MC No. 11, Series of 2003.
The petitioners failed to file a reply despite the Court's several notices. In the Manifestation, 22
dated April 20, 2015, their lawyer23 explained that the petitioners had not been responding to
calls or other communication after Capitol was taken over by ALI sometime in the middle of
2011.
The Court's Ruling
The CA ruled in the negative on both scores and this Court agrees for the reasons discussed
hereinafter.
On SEC's authority to take cognizance of the letter-complaint
Under the SRC, jurisdiction on matters stated under Section 5 of P.D. No. 902-A, which was
originally vested in the SEC, has already been transferred to the RTC acting as a special
commercial court. Despite the said transfer, however, the SEC still retains sufficient powers to
justify its assumption of jurisdiction over matters concerning its supervisory, administrative and
regulatory functions. In SEC v. Subic Bay Golf and Country Club, Inc. (SBGCCI) and Universal
International Group Development Corporation (UIGDC),24 for instance, the Court affirmed the
SEC's assumption of jurisdiction over a complaint, which alleged that SBGCCI and UIGDC
committed misrepresentations in the sale of their shares. The Court held in the said case that
nothing prevented the SEC from assuming jurisdiction to determine if SBGCCI and UIGDC
committed administrative violations and were liable under the SRC despite the complaint having
raised intra-corporate issues. It also ruled that the SEC may investigate activities of corporations
to ensure compliance with the law.
In ruling that way, the Court cited Sections 5 and 53 of the SRC as justifications, to
wit:chanRoblesvirtualLawlibrary
SECTION 5. Powers and Functions of the Commission. 5.1. The Commission shall act with
transparency and shall have the powers and functions provided by this Code, Presidential
Decree No. 902-A, the Corporation Code, the Investment Houses Law, the Financing Company
Act and other existing laws. Pursuant thereto the Commission shall have, among others, the
following powers and functions:chanRoblesvirtualLawlibrary
(a) Have jurisdiction and supervision over all corporations, partnerships or associations
who are the grantees of primary franchises and/or a license or permit issued by the
Government;
xxx
(d) Regulate, investigate or supervise the activities of persons to ensure compliance;
xxx
(n) Exercise such other powers as may be provided by law as well as those which may be
implied from, or which are necessary or incidental to the carrying out of, the express powers
granted the Commission to achieve the objectives and purposes of these laws.
xxx
SECTION 53. Investigations, Injunctions and Prosecution of Offenses. 53.1. The
Commission may, in its discretion, make such investigations as it deems necessary to
determine whether any person has violated or is about to violate any provision of this
Code, any rule, regulation or order thereunder, or any rule of an Exchange, registered securities
association, clearing agency, other self-regulatory organization, and may require or permit any
person to file with it a statement in writing, under oath or otherwise, as the Commission shall
determine, as to all facts and circumstances concerning the matter to be investigated.
xxxcralawred
Beyond doubt, therefore, is the authority of the SEC to hear cases regardless of whether an
action involves issues cognizable by the RTC, provided that the SEC could only act upon those
which are merely administrative and regulatory in character. In other words, the SEC was never
dispossessed of the power to assume jurisdiction over complaints, even if these are riddled with
intra-corporate allegations, if their invocation of authority is confined only to the extent of
ensuring compliance with the law and the rules, as well as to impose fines and penalties for
violation thereof; and to investigate even motu proprio whether corporations comply with the
Corporation Code, the SRC and the implementing rules and regulations.
Thus, in this case, there is simply no doubt that the SEC acted properly in assuming jurisdiction
over the letter-complaint filed by private respondents. A perusal of their letter-complaint
demonstrates that private respondents sought the SEC's intervention in the interest of the
minority stockholders by "conducting thorough investigation"25 on the actions of the petitioners
over "the apparent anomalies and fraud over the agreement with ALI," the growing labor unrest
at [Capitol], the unpaid individual creditors some of whom have already gone into courts to
enforce collection, the continuing financial mismanagement and gross negligence and
incompetence shown by Mr. Pablo B. Roman, Jr., et al. in running the business affairs of
[Capitol] xxx that resulted in losses, wastages and dissipation of funds of the corporation.26 Their
prayer for the SEC to exercise its investigatory powers in the end would adequately justify the
assumption of jurisdiction over the letter-complaint regardless if, indeed, intra-corporate
allegations were raised.
As the SEC is not ousted of its regulatory and administrative jurisdiction to determine and act if
administrative violations were committed,27 no grave abuse of discretion can be attributed to it
when it assumed jurisdiction over the letter-complaint. Accordingly, the Court finds no error with
what was held by the CA.
On the Constitution of the MANCOM
The SEC submits that the power to constitute a management committee is based on its
supervisory and regulatory functions. It cites SEC-MC No. 11, Series of 2003 as authority, which
provides in part:chanRoblesvirtualLawlibrary
4. Notwithstanding the foregoing, the Commission, as provided in Section 5 of the SRC and the
effective provisions of PD 902-A, shall have the power to do any and all acts to carry out the
effective implementation of the laws it is mandated to enforce, i.e.: constitute a Management
Committee; appoint receivers, issue Cease and Desist Orders to prevent fraud or injury to the
public; and such other measures to carry out its role as a regulator.cralawred
In effect, the authority of the SEC is viewed as one that is intimately related to its functions as a
regulator.
The petitioners reject this and opine that constituting the MANCOM involves an intra-corporate
controversy, which is within the jurisdiction of the RTC. Invoking Section 5.2 of the SRC, they
contend that the authority to create the MANCOM is exclusive to the RTC and no longer with the
SEC.
Indeed, Section 5.2. of the SRC has transferred jurisdiction over intra-corporate controversies to
the RTC. It provides:chanRoblesvirtualLawlibrary
The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential
Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court: Provided, that the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over these cases.
The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes
submitted for final resolution which should be resolved within one (l) year from the enactment of
this Code. The Commission shall retain jurisdiction over pending suspension of payments/
rehabilitation cases filed as of 30 June 2000 until finally disposed.cralawred
Relative thereto, Section 5 of P.D. No. 902-A states:chanRoblesvirtualLawlibrary
SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and decrees, it shall have original and
exclusive jurisdiction to hear and decide cases involving
a) Devices or schemes employed by or any acts, of the board of directors, business
associates, its officers or partnership, amounting to fraud and misrepresentation which
may be detrimental to the interest of the public and/or of the stockholder, partners,
members of associations or organizations registered with the Commission;
b) Controversies arising out of intra-corporate or partnership relations, between and
among stockholders, members, or associates; between any or all of them and the
corporation, partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership or association
and the state insofar as it concerns their individual franchise or right to exist as such
entity; and
c) Controversies in the election or appointments of directors, trustees, officers or
managers of such corporations, partnerships or associations.
Clearly, any dispute concerning intra-corporate issues is now beyond the province of the SEC.
Yet, it must be stressed that under Section 5.1 (n) of the SRC, the SEC is permitted to exercise
such other powers as may be provided for by law as well as those which may be implied from, or
which are necessary or incidental to the carrying out, of the express powers granted the SEC to
achieve the objectives and purposes of these laws.
With such broad authority, it is beyond question that the SEC, as a regulator, has broad demonstrated connection with the public interest, there is likewise an impairment of the
discretion to act on matters that relate to its express power of supervision over all corporations, obligation of the contract.
partnerships or associations who are the grantees of primary franchises and/or a license or
permit issued by the Government. Such grant of express power of supervision, necessarily Pioneer Insurance & Surety Corporation vs Court of Appeals
includes the power to create a management committee following the doctrine of necessary
implication. 175 SCRA 668 Business Organization Corporation Law When De Facto Partnership Does
Not Exist
The reason is simple. The creation of a management committee is one that is premised on the Jacob Lim was the owner of Southern Air Lines, a single proprietorship. In 1965, Lim convinced
immediate and speedy protection of the interest not only of minority stockholders, but also of the Constancio Maglana, Modesto Cervantes, Francisco Cervantes, and Border Machinery and
general public from immediate danger of loss, wastage or destruction of assets or the Heavy Equipment Company (BORMAHECO) to contribute funds and to buy two aircrafts which
paralyzation of business of a concerned corporation or entity.28 No body is more competent to would form part a corporation which will be the expansion of Southern Air Lines. Maglana et al
provide such a temporary relief other than the regulatory body of these companies - the SEC. then contributed and delivered money to Lim.
But instead of using the money given to him to pay in full the aircrafts, Lim, without the
Thus, such authority is expressly sanctioned under SEC-MC No. 11, Series of 2003. Suffice it to knowledge of Maglana et al, made an agreement with Pioneer Insurance for the latter to insure
state that such circular enjoys the presumption of validity unless this Court declares otherwise. the two aircrafts which were brought in installment from Japan Domestic Airlines (JDA) using
said aircrafts as security. So when Lim defaulted from paying JDA, the two aircrafts were
WHEREFORE, the petition is DENIED. foreclosed by Pioneer Insurance.
It was established that no corporation was formally formed between Lim and Maglana et al.
SO ORDERED.chanroblesvirtuallawlibrary ISSUE: Whether or not Maglana et al must share in the loss as general partners.
HELD: No. There was no de facto partnership. Ordinarily, when co-investors agreed to do
Carpio, (Chairperson), and Leonen, JJ., concur. business through a corporation but failed to incorporate, a de facto partnership would have been
Brion, and Jardeleza,**JJ., on official leave. formed, and as such, all must share in the losses and/or gains of the venture in proportion to
their contribution. But in this case, it was shown that Lim did not have the intent to form a
National Development Corporation vs Philippine Veterans Bank corporation with Maglana et al. This can be inferred from acts of unilaterally taking out a surety
192 SCRA 257 [GR No. 84132-33 December 10, 1990] from Pioneer Insurance and not using the funds he got from Maglana et al. The record shows
Facts: The particular enactment in question is Presidential Decree No. 1717, which ordered the that Lim was acting on his own and not in behalf of his other would-be incorporators in
rehabilitation of the Agrix Group of Companies to be administered mainly by the National transacting the sale of the airplanes and spare parts.
Development Company. The law outlined the procedure for filling claims against the Agrix
Companies and created a claims committee to process these claims. Especially relevant to this
case, and noted at the outset, is section 4(1) thereof providing that all mortgages and other
liens presently attaching to any of the assets of the dissolved corporations are hereby
extinguished. Earlier, the Agrix Marketing Inc. had executed in favor of private respondent
Philippine Veterans Bank a real estate mortgage dated July 7, 1978 over three parcels of land
situated in Los Baos, Laguna. During the existence of the mortgage, Agrix went bankrupt. It
was the expressed purpose of salvaging this and the other Agrix companies that the
aforementioned decree was issued by President Marcos. A claim for the payment of its loan
credit was filed by PNB against herein petitioner, however the latter alleged and invoked that the
same was extinguished by PD 1717.
Issue: Whether or not Philippine Veterans Bank as creditor of Agrix is still entitled for payment
without prejudice to PD 1717.
Held: Yes. A mortgage lien is a property right derived from contract and so comes under the
protection of Bill of rights so do interests on loans, as well s penalties and charges, which are
also vested rights once they accrue. Private property cannot simply be taken by law from one
person and given to another without just compensation and any known public purpose. This is
plain arbitrariness and is not permitted under the constitution.
The court also feels that the decree impairs the obligation of the contract between Agrix and the
private respondent without justification. While it is true that the police power is superior to the
impairment clause, the principle will apply only where the contract is so related to the public
welfare that it will be considered congenitally susceptible to change by the legislature in the
interest of greater number.
Our finding in sum, is that PD 1717 is an invalid exercise of the police power, not being in
conformity with the traditional requirements of a lawful subject and a lawful method. The
extinction of the mortgage and other liens and of the interest and other charges pertaining to the
legitimate creditors of Agrix constitutes taking without due process of law, and this is
compounded by the reduction of the secured creditors to the category of unsecured creditors in
violation of the equal protection clause. Moreover, the new corporation being neither owned nor
controlled by the government, should have been created only by general and not special law.
And in so far as the decree also interferes with purely private agreements without any