01.01 Union Glass & Container Corporation Vs Securities and Exchange Commission PDF

VOL.
126,NOVEMBER28,1983 31
UnionGlass&ContainerCorporationvs.SecuritiesandExchange
Commission
*
No.L64013.November28,1983.
UNION GLASS & CONTAINER CORPORATION and
CARLOS PALANCA, JR., in his capacity as President of
Union Glass & Container Corporation, petitioners, vs. THE
SECURITIES AND EXCHANGE COMMISSION and
CAROLINAHOFILEA,respondents.
Jurisdiction Corporation Law Requisites for Securities and
Exchange Commission to have jurisdiction over a case.Otherwise
stated, in order that the SEC can take cognizance of a case, the
controversy must pertain to any of the following relationships: [a]
betweenthecorporation,partnershiporassociationandthepublic[b]
between the corporation, partnership or association and its
stockholders, partners, members, or officers [c] between the
corporation, partnership or association and the state in so far as its
franchise,permitorlicensetooperateisconcernedand[d]amongthe
stockholders,partnersorassociatesthemselves.
SameSameWhere a defendant in a complaint filed before the
S.E.C. has no intracorporate relationship with the complainant it
cannot be joined as partydefendant in the S.E.C. case.As
heretoforepointedout,petitionerUnionGlassisinvolvedonlyinthe
first cause of action of Hofilea's complaint in SEC Case No. 2035.
While the Rules of Court, which applies suppletorily to proceedings
before, the SEC, allows the joinder of causes of action in one
complaint, such procedure however is subject to the rules regarding
jurisdiction,venueandjoinderofparties.Sincepetitionerhasnointra
corporaterelationshipwiththecomplainant,itcannotbejoined
_________________
*ENBANC.
32 SUPREMECOURTREPORTSANNOTATED
Commission
as partydefendant in said case as to do so would violate the rule on
jurisdiction.Hofilea'scomplaintagainstpetitionerforcancellationof
the sale of the glass plant should therefore be brought separately
before the regular court. But such action, if instituted, shall be
suspendedtoawaitthefinaloutcomeofSECCaseNo.2035,forthe
issueofthevalidityofthedacionenpagoposedinthelastmentioned
case is a prejudicial question, the resolution of which is a logical
antecedentoftheissueinvolvedintheactionagainstpetitionerUnion
Glass.Thus,Hofilea'scomplaintagainstthelattercanonlyprosperif
final judgment is rendered in SEC Case No. 2035, annulling the
dacionenpagoexecutedinfavoroftheDBP.
Teehankee,.J,concurring:
Jurisdiction Corporation Action The suit that Hofilea may
bringagainstUnionGlassintheregularcourtsofjusticeissubjectto
allotherdefensesthatitmayinterpose,suchasbeingabuyeringood
faith, even if the dacion en pago is annulled.The purpose of this
brief concurrence is with reference to the statement in the Court's
opinion that "Thus, Hofilea's complaint against the latter can only
prosperiffinaljudgmentisrenderedinSECCaseNo.2035,annulling
the dacion en pago executed in favor of the DBP," to erase any
impression that a favorable judgment secured by Hofilea in SEC
CaseNo.2035againsttheDBPandPioneerGlasswouldnecessarily
meanthatitsactionagainstUnionGlassintheregularcourtsofjustice
for recovery and cancellation of the DBP sale of the glass plant to
UnionGlasswouldnecessarilyprosper.Itmustbeborneinmindthat
asalreadyindicated,theSEChasnojurisdictionoverUnionGlassas
an outsider. The suit in the regular courts of justice that Hofilea
mightbringagainstUnionGlassisofcoursesubjecttoalldefensesas
tothevalidityofthesaleoftheglassplantinitsfavorasabuyerin
goodfaithandshoulditsuccessfullysubstantiatesuchdefenses,then
Hofilea'sactionagainstitforcancellationofthesalemightfailasa
consequence.
Aquino,J.,dissenting:
Certiorari Administrative Law Petitioners are guilty of laches
andnonexhaustionofadministrativeremedies.lnthiscase,theSEC
seemstohaveadoptedtheordersofthetwohearingofficersasitsown
orders as shown by the stand taken by the Solicitor General in
defendingtheSEC.Ifthatwereso,thatis,iftheordersofthe
VOL.126,NOVEMBER28,1983 33
Commission
hearing officers should be treated as the orders of the SEC itself en
banc,thisCourtwouldhavenojurisdictionoverthiscase.Itshouldbe
theAppellateCourtthatshouldexercisethepowerofreview.
Action Jurisdiction Mere joinder of another defendant in a
S.E.C. case with which complainant has no intracorporate
relationship should not divest S.E.C. of jurisdiction over said other
defendantwhichhasaprivityofinterestwiththecorporationwherein
complainant is a stockholder.Certainly, the joinder of Union Glass
does not divest the SEC of jurisdiction over the case. The joinder of
UnionGlassisnecessarybecausetheDBP,itstransferor,isbeingsued
regardingthedacionenpago.ThedefensesofUnionGlassaretiedup
withthedefensesoftheDBPintheintracorporatedispute.Hofilea's
cause of action should not be split. It would not be judicious and
expedienttorequireHofileatosuetheDBPandUnionGlassinthe
RegionalTrialCourt.TheSECismorecompetentthanthesaidcourt
todecidetheintracorporatedispute.
PETITIONforcertiorariandprohibitiontoreviewtheorderof
theSecuritiesandExchangeCommission.
ThefactsarestatedintheopinionoftheCourt.
EduardoR.Cenizaforpetitioners.
TheSolicitorGeneralforrespondentSEC.
RemediosC.BalbinforrespondentCarolinaY.Hofilea.
ESCOLIN,J.:
This petition for certiorari and prohibition seeks to annul and
set aside the Order of the Securities and Exchange
Commission, dated September 25, 1981, upholding its
jurisdictioninSECCaseNo.2035,entitled"CarolinaHofilea,
Complainant, versus Development Bank of the Philippines, et
al.,Respondents."
Private respondent Carolina Hofilea, complainant in SEC
Case No. 2035, is a stockholder of Pioneer Glass
Manufacturing Corporation, Pioneer Glass for short, a
domestic corporation engaged in the operation of silica mines
andthemanufactureofglassandglassware.Since1967,
Commission
PioneerGlasshadobtainedvariousloanaccommodationsfrom
theDevelopmentBankofthePhilippines[DBP],andalsofrom
otherlocalandforeignsourceswhichDBPguaranteed.
As security for said loan accommodations, Pioneer Glass
mortgagedand/orassigneditsassets,realandpersonal,tothe
DBP, in addition to the mortgages executed by some of its
corporate officers over their personal assets. The proceeds of
said financial exposure of the DBP were used in the
construction of a glass plant in Rosario, Cavite, and the
operation of seven silica mining claims owned by the
corporation.
It appears that through the conversion into equity of the
accumulatedunpaidinterestsonthevariousloansamountingto
P5.4millionasofJanuary1975,andsubsequentlyincreasedby
anotherP2.2millionin1976,theDBPwasabletogaincontrol
oftheoutstandingsharesofcommonstocksofPioneerGlass,
and to get two, later three, regular seats in the corporation's
boardofdirectors.
Sometime in March, 1978, when Pioneer Glass suffered
seriousliquidityproblemssuchthatitcouldnolongermeetits
financialobligationswithDBP,itenteredintoadacionenpago
agreement with the latter, whereby all its assets mortgaged to
DBP were ceded to the latter in full satisfaction of the
corporation's obligations in the total amount of
P59,000,000.00.PartoftheassetstransferredtotheDBPwas
the glass plant in Rosario, Cavite, which DBP leased and
subsequently sold to herein petitioner Union Glass and
ContainerCorporation,hereinafterreferredtoasUnionGlass.
On April 1, 1981, Carolina Hofilea filed a complaint
before the respondent Securities and Exchange Commission
against the DBP, Union Glass and Pioneer Glass, docketed as
SEC Case No. 2035. Of the five causes of action pleaded
therein, only the first cause of action concerned petitioner
UnionGlassastransfereeandpossessoroftheglassplant.Said
firstcauseofactionwasbasedontheallegedillegalityofthe
aforesaid dacion en pago resulting from: [1] the supposed
unilateral and unsupported undervaluation of the assets of
PioneerGlass
Commission
covered by the agreement [2] the selfdealing indulged in by
DBP, having acted both as stockholder/director and secured
creditor of Pioneer Glass and [3] the wrongful inclusion by
DBPinitsstatementofaccountofP26MasduefromPioneer
Glasswhenthesamehadalreadybeenconvertedintoequity.
Thus, with respect to said first cause of action, respondent
HofileaprayedthattheSECissueanorder:
"1. Holding that the so called dacion en pago conveying all the
assets of Pioneer Glass and the Hofilea personal properties to
Union Glass be declared null and void on the ground that the
saidconveyancewastaintedwith.
"A. Selfdealing on the part of DBP which was acting both as a
controlling stockholder/director and as secured creditor of the
Pioneer Glass, all to its advantage and to that of Union Glass,
andtothegrossprejudiceofthePioneerGlass
"B. That the dacion en pago is void because there was gross
undervaluationoftheassetsincludedinthesocalleddacionen
pagobymorethan100%totheprejudiceofPioneerGlassandto
theundueadvantageofDBPandUnionGlass
"C. That the DBP unduly favored Union Glass over another buyer,
San Miguel Corporation, notwithstanding the clearly
advantageous terms offered by the latter to the prejudice of
Pioneer Glass, its other creditors and socalled 'minority
stockholders.'
"2. HoldingthattheassetsofthePioneerGlasstakenoverbyDBP
andpartofwhichwasdeliveredtoUnionGlassparticularlythe
glassplanttobereturnedaccordingly.
"3. That the DBP be ordered to accept and recognize the appraisal
conductedbytheAsianAppraisalInc.in1975andagainin1978
1
oftheassetofPioneerGlass.''
Inhercommonprayer,HofileaaskedthatDBPbesentenced
to pay Pioneer Glass actual, consequential, moral and
exemplary damages, for its alleged illegal acts and gross bad
faithandforDBPandUnionGlasstopayhera
________________
1p.38,Rollo.
Commission
2
reasonableamountasattorney'sfees.
On April 21,1981, Pioneer Glass filed its answer. On May
8, 1981, petitioners moved for dismissal of the case on the
groundthattheSEChadnojurisdictionoverthesubjectmatter
ornatureofthesuit.RespondentHofileafiledheropposition
tosaidmotion,towhichhereinpetitionersfiledarejoinder.
OnJuly23,1981,SECHearingOfficerEugenioE.Reyes,
towhomthecasewasassigned,grantedthemotiontodismiss
forlackofjurisdiction.However,onSeptember25,1981,upon
motion for reconsideration filed by respondent Hofilea,
HearingOfficerReyesreversedhisoriginalorderbyupholding
the SEC's jurisdiction over the subject matter and over the
personsofpetitioners.Unabletosecureareconsiderationofthe
OrderaswellastohavethesamereviewedbytheCommission
EnBanc,petitionersfiledtheinstantpetitionforcertiorariand
prohibitiontosetasidetheorderofSeptember25,1981,andto
preventrespondentSECfromtakingcognizanceofSECCase
No.2035.
Theissueraisedinthepetitionmaybepropoundedthus:Is
it the regular court or the SEC that has jurisdiction over the
case?
In upholding the SEC's jurisdiction over the case Hearing
OfficerReyesrationalizedhisconclusionthus:
"Ascorrectlypointedoutbythecomplainant,thepresentactionisin
theformofaderivativesuitinstitutedbyastockholderforthebenefit
of the corporation, respondent Pioneer Glass and Manufacturing
Corporation principally against another stockholder, respondent
Development Bank of the Philippines, for alleged illegal acts and
grossbadfaithwhichresultedinthedacionenpagoarrangementnow
beingquestionedbycomplainant.Theseallegedillegalactsandgross
bad faith came about precisely by virtue of respondent Development
Bank of the Philippine's status as a stockholder of corespondent
Pioneer Glass Manufacturing Corporation although its status as such
stockholder,wasgainedasaresultofitsbeingacreditorofthelatter.
The derivative nature of this instant action can also be gleaned from
thecommonprayerof
________________
2p.40,Rollo.
Commission
the complainant which seeks for an order directing respondent
Development Bank of the Philippines to pay corespondent Pioneer
GlassManufacturingCorporationdamagesfortheallegedillegalacts
andgrossbadfaithasabovementioned.
"As far as respondent Union Glass and Container Corporation is
concerned,itsinclusionasapartyrespondentbyvirtueofitsbeingan
indispensablepartytothepresentaction,itbeinginpossessionofthe
assetssubjectofthedacionenpagoand,therefore,situatedinsucha
3
waythatitwillbeaffectedbyanyjudgmentthereon."
In the ordinary course of things, petitioner Union Glass, as
transferee and possessor of the glass plant covered by the
dacionenpagoagreement,shouldbejoinedaspartydefendant
underthegeneralrulewhichrequiresthejoinderofeveryparty
whohasaninterestinorlienonthepropertysubjectmatterof
4
thedispute. Suchjoinderofpartiesavoidsmultiplicityofsuits
as well as ensures the convenient, speedy and orderly
administrationofjustice.
But since petitioner Union Glass has, no intracorporate
relationwitheitherthecomplainantortheDBP,itsjoinderas
partydefendant in SEC Case No, 2035 brings the cause of
action asserted against it outside the jurisdiction of the
respondentSEC,
ThejurisdictionoftheSECisdelineatedbySection5ofPD
No.902Aasfollows:
"Sec.5.Inadditiontotheregulatoryandadjudicativefunctionofthe
SecuritiesandExchangeCommissionovercorporations,partnerships
andotherformsofassociationsregisteredwithitasexpresslygranted
under existing laws and devices, it shall have original and exclusive
jurisdictiontohearanddecidecasesinvolving:
a]Devicesandschemesemployedbyoranyacts,oftheboardof
directors, business associates, its officers or partners, amounting to
fraudandmisrepresentationwhichmaybedetrimentaltotheinterest
of the public and/or the stockholders, partners, members of
associationsororganizationsregisteredwiththeCommission
________________
3p.24,Rollo.
459Am.Jur.2d530.
Commission
b]Controversiesarisingoutofintracorporateorpartnershiprelations,
between and among stockholders, members or associates between
anyorallofthemandthecorporation,partnership,orassociationof
whichtheyarestockholders,membersorassociates,respectivelyand
between such corporation, partnership or association and the state
insofarasitconcernstheirindividualfranchiseorrighttoexistassuch
entity
c] Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships or
associations."
This grant of jurisdiction must be viewed in the light of the
natureandfunctionoftheSECunderthelaw.Section3ofPD
No. 902A confers upon the latter "absolute jurisdiction,
supervision, and control over all corporations, partnerships or
associations, who are grantees of primary franchise and/or
license or permit issued by the government to operate in the
Philippines x x x.' " The principal function of the SEC is the
supervision and control over corporations, partnerships and
associations with the end in view that investment in these
entities may be encouraged and protected, and their5 activities
pursuedforthepromotionofeconomicdevelopment.
Itisinaidofthisofficethattheadjudicativepowerofthe
SEC must be exercised. Thus the law explicitly specified and
delimiteditsjurisdictiontomattersintrinsicallyconnectedwith
the regulation of corporations, partnerships and associations
andthosedealingwiththeinternalaffairsofsuchcorporations,
partnershipsorassociations.
Otherwisestated,inorderthattheSECcantakecognizance
ofacase,thecontroversymustpertaintoanyofthefollowing
relationships: [a] between the corporation, partnership or
association and the public [b] between the corporation,
partnership or association and its stockholders, partners,
members,orofficers[c]betweenthecorporation,partnership
orassociationandthestateinsofarasitsfranchise,permitor
license to operate is concerned and [d] among the
stockholders,partnersorassociatesthemselves.
_________________
5Vide,WhereasClausesofP.D.902A.
Commission
The fact that the controversy at bar involves the rights of
petitioner Union Glass who has no intracorporate relation
eitherwithcomplainantortheDBP,placesthesuitbeyondthe
jurisdiction of the respondent SEC. The case should be tried
and decided by the court of general jurisdiction, the Regional
Trial Court. This view is in accord with the rudimentary
principle that administrative 6 agencies, like the SEC, are
tribunalsoflimitedjurisdiction and,assuch,couldwieldonly
such powers as7 are specifically granted to them by their
enabling statutes. As8 We held in Sunset View Condominium
Corp.vs.Campos,Jr.:
"Inasmuch as the private respondents are not shareholders of the
petitioner condominium corporation, the instant cases for collection
cannot be a 'controversy arising out of intracorporate 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,'whichcontroversiesareundertheoriginalandexclusive
jurisdiction of the Securities & Exchange Commission, pursuant to
Section5[b]ofP.D.No.902A.xxx"
As heretofore pointed out, petitioner Union Glass is involved
only in the first cause of action of Hofilea's "complaint in
SECCaseNo.2035.WhiletheRulesofCourt,whichapplies
suppletorilytoproceedingsbeforetheSEC,allowsthejoinder
ofcausesofactioninonecomplaint,suchprocedurehowever
issubjecttotherulesregardingjurisdiction,venueandjoinder
9
ofparties. Since petitioner has no intracorporate relationship
withthecomplainant,itcannotbejoinedaspartydefendantin
said case as to do so would violate the rule on jurisdiction.
Hofilea's complaint against petitioner for cancellation of the
sale of the glass plant should therefore be brought separately
beforetheregularcourt.Butsuchaction,ifinstituted,shallbe
suspendedtoawaitthefinal
________________
62Am.Jur.2d.150.
72Am.Jur.2d.21.
8104SCRA295.
9Section5,Rule2oftheRulesofCourt,
Commission
outcomeofSECCaseNo.2035,fortheissueofthevalidityof
the dacion en pago posed in the last mentioned case is a
prejudicial question, the resolution of which is a logical
antecedentoftheissueinvolvedintheactionagainstpetitioner
UnionGlass.Thus,Hofilea'scomplaintagainstthelattercan
only prosper if final judgment is rendered in SEC Case No.
2035, annulling the dacion en pago executed in favor of the
DBP.
WHEREFORE, the instant petition is hereby granted, and
thequestionedOrdersofrespondentSEC,datedSeptember25,
1981,March25,1982andMay28,1982,areherebysetaside.
Respondent Commission is ordered to drop petitioner Union
GlassfromSECCaseNo.2035,withoutprejudicetothefiling
of a separate suit before the regular court of justice. No
pronouncementastocosts.
SOORDERED.
Concepcion, Jr., Guerrero, Abad Santos, De Castro,
MelencioHerrera, Plana, Relova and Gutierrez, Jr., JJ.,
concur.
Fernando,C.J.andMakasiar,J.,joinAquino,J.,inhis
dissent.
Teehankee,J.,filesabriefconcurrence.
TEEHANKEE,J.,concurring:
IconcurintheCourt'sjudgmentpennedbyMr.JusticeEscolin
setting aside the questioned orders of respondent SEC and
ordering that petitioner Union Glass be dropped from SEC
Case No. 2035 for lack of SEC jurisdiction over it as a third
party purchaser of the glass plant acquired by the DBP by
dacion en pago from Pioneer Glass, without prejudice to
Hofilea filing a separate suit in the regular courts of justice
against Union Glass for recovery and cancellation of the said
saleoftheglassplantinfavorofUnionGlass,
IconcuralsowiththestatementintheCourt'sopinionthat
the final outcome of SEC Case No. 2035 with regard to the
validityofthedacionenpagoisaprejudicialcase.If
Commission
Hofilea's complaint against said dacion en pago fails in the
SEC,thenitclearlyhasnocauseofactionagainstUnionGlass
forcancellationofDBP'ssaleoftheplanttoUnionGlass.
The purpose of this brief concurrence is with reference to
the statement in the Court's opinion that "Thus, Hofilea's
complaintagainstthelattercanonlyprosperiffinaljudgment
is rendered in SEC Case No. 2035, annulling the dacion en
pago executed in favor of the DBP," to erase any impression
that a favorable judgment secured by Hofilea in SEC Case
No.2035againsttheDBPandPioneerGlasswouldnecessarily
meanthatitsactionagainstUnionGlassintheregularcourtsof
justice for recovery and cancellation of the DBP sale of the
glass plant to Union Glass would necessarily prosper. It must
be borne in mind that as already indicated, the SEC has no
jurisdiction over Union Glass as an outsider. The suit in the
regular courts of justice that Hofilea might bring against
Union Glass is of course subject to all defenses as to the
validityofthesaleoftheglassplantinitsfavorasabuyerin
good faith and should it successfully substantiate such
defenses, then Hofilea's action against it for cancellation of
thesalemightfailasaconsequence.
AQUINO,J.,dissenting:
IdissentwithduedeferencetoJusticeEscolin'sopinion,What
are belatedly assailed in this certiorari and prohibition case
filedonMay17,1983aretheorderofSeptember25,1981of
Eugenio E. Reyes, a SEC hearing officer, and the orders of
March 25 and May 28, 1982 of Antonio R. Manabat, another
SEChearingofficer.
Although a jurisdictional issue is raised and jurisdiction
overthesubjectmattermayberaisedatanystageofthecase,
nevertheless, the petitioners are guilty of laches and
nonexhaustionoftheremedyofappealwiththeSecuritiesand
ExchangeCommissionenbanc.
The petitioners resorted to the special civil actions of
certiorariandprohibitionbecausetheyassailtheordersof
Commission
mere SEC hearing officers. This is not a review of the order,
decisionorrulingoftheSECsittingenbancwhich,according
tosection6ofPresidentialDecreeNo.902A(1976),maybe
made by this Court "in accordance with the pertinent
provisionsoftheRulesofCourt.''
Rule43oftheRulesofCourtusedtoallowreviewbythis
CourtoftheSECorder,rulingordecision.RepublicAct5434
(1968) substituted the Court of Appeals for this Court in line
with the policy of lightening our heavy jurisdictional burden.
But this Court seems to have been restored as the reviewing
authoritybyPresidentialDecreeNo.902A.
However, section 9 of the Judiciary Reorganization Law
returned to the Intermediate Appellate Court the exclusive
jurisdictiontoreviewtheruling,orderordecisionoftheSEC
as a quasijudicial agency. The same section 9 granted to the
AppellateCourtjurisdictionincertiorariandprohibitioncases
overtheSECalthoughnotexclusive.
In this case, the SEC seems to have adopted the orders of
the two hearing officers as its own orders as shown by the
stand taken by the Solicitor General in defending the SEC. If
thatwereso,thatis,iftheordersofthehearingofficersshould
betreatedastheordersoftheSECitselfenbanc, this Court
would have no jurisdiction over this case. It should be the
AppellateCourtthatshouldexercisethepowerofreview.
CarolinaHofileahasbeenastockholdersince1958ofthe
PioneerGlassManufacturingCorporation.Herpersonalassets
valuedatP6,804,810wereapparentlyorsupposedlymortgaged
to the DBP to secure the obligations of Pioneer Glass (p. 32,
Rollo).
PioneerGlassbecameindebtedtotheDevelopmentBankof
thePhilippinesinthetotalsumofP59,000,000.Partoftheloan
was used by Pioneer Glass to establish its glass plant in
Rosario,Cavite.Theunpaidinterestontheloanamountingto
around seven million pesos became the DBP's equity in
Pioneer Glass. The DBP became a substantial stockholder of
Pioneer Glass. Three members of the Pioneer Glass' board of
directorswerefromtheDBP.
Commission
The glass plant commenced operations in 1977, At that time,
Pioneer Glass was heavily indebted to the DBP. Instead of
foreclosing its mortgage, DBP maneuvered to have the
mortgaged assets of Pioneer Glass, including the glass plant,
transferred to the DBP by way of dacion en pago, This
transactionwasallegedtobean"autocontract"oracaseofthe
DBP contracting with itself since the DBP had a dominant
positioninPioneerGlass.
Hofilea alleged that although the debt to the DBP of
Pioneer Glass amounted to P59,000,000, the glass plant in
1977hada"soundvalue"ofP77,329,000anda"reproduction
cost" of P90,403,000. She further alleged that San Miguel
CorporationwaswillingtobuytheglassplantforP40,000,000
cash,whereasitwasactuallysoldtoUnionGlass&Container
Corporation for the same amount under a 25year term of
payment(pp.3234,Rollo).
OnMarch31,1981CarmenHofileafiledwiththeSECa
complaint against the DBP, Union Glass, Pioneer Glass and
RafaelSisonaschairmanoftheDBPandPioneerGlassboards
of directors. Union Glass filed a motion to dismiss on the
groundthatjurisdictionoverthecaseislodgedintheCourtof
First Instance. Hofilea opposed the motion. Hearing Officer
ReyesinhisorderofJuly23,1981dismissedthecomplainton
thegroundthatthecaseisbeyondthejurisdictionoftheSEC.
Hofilea filed a motion for reconsideration which was
opposedbyUnionGlass.HearingOfficerReyesinhisorderof
September25,1981reconsideredhisdismissalorderandruled
that Union Glass is an indispensable party because it is the
transfereeofthecontrovertedassetsgivenbywayofdacionen
pagototheDBP.HeruledthattheSEChasjurisdictionover
thecase.
Union Glass filed a motion for reconsideration. Hearing
OfficerAntonioR.Manabatdeniedthemotionontheground
"thatthepresentactionisanintracorporatedisputeinvolving
stockholdersofthesamecorporation(p.26,Rollo).
UnionGlassfiledasecondmotionforreconsiderationwith
theprayerthattheSECshoulddecidethemotionenbanc.The
Commission
hearingofficerruledthattheremedyofUnionGlasswastofile
a timely appeal. Hence, its second motion for reconsideration
wasdeniedbythehearingofficer.(Thisrulingisatechnicality
whichhinderssubstantialjustice.)
It is clear that Union Glass has no cause of action for
certiorariandprohibition.ItsrecoursewastoappealtotheSEC
enbancthedenialofitsfirstmotionforreconsideration.
ThereisnoquestionthattheSEChasjurisdictionoverthe
intracorporate dispute between Hofilea and the DBP, both
stockholdersofPioneerGlass,overthedacionenpago.
Now,doestheSEClosejurisdictionbecauseofthejoinder
ofUnionGlasswhichhasprivitywiththeDBPsinceitwasthe
transfereeoftheassetsinvolvedinthedacionenpago.
Certainly, the joinder of Union Glass does not divest the
SECofjurisdictionoverthecase.ThejoinderofUnionGlass
is necessary because the DBP, its transferor, is being sued
regardingthedacionenpago.ThedefensesofUnionGlassare
tied up with the defenses of the DBP in the intracorporate
dispute.Hofilea'scauseofactionshouldnotbesplit.
ItwouldnotbejudiciousandexpedienttorequireHofilea
to sue the DBP and Union Glass in the Regional Trial Court.
The SEC is more competent than the said court to decide the
intracorporatedispute.
The SEC, as the agency enforcing Presidential Decree No.
902A, is in the best position to know the extent of its
jurisdiction.Itsdeterminationthatithasjurisdictioninthiscase
haspersuasiveweight.
Petitiongranted.
Notes.On matter involving the affairs of an
unincorporated association, such as election contests for
officers of the Lions Club, the courts generally will not
interfere in the ruling of its policymaking body. (Lions Club
Internationalvs.Amores,121SCRA621.)
Achapterofasemicharitableorreligiouscorporationcan
activelyrepresentitsmotherorganizationaspartyina
Monsantovs.Palarca
litigation. (Special Services Corp. vs. Centro La Paz, 121
SCRA748.)
ThepresentCorporationLawattachesapenalsanctionand
denies access to courts and administrative tribunals to foreign
corporations doing business here without license. (Home Ins.
Co.vs.EasternShippingLines,Inc.,123SCRA424.)
Astockholderenjoysnopreemptiverighttobuyunissued
sharesoforiginallyauthorizedcapitalstock.(DatuTagonarao
Benito vs. Securities and Exchange Commission, 123 SCRA
722.)
ThePhilippineNationalBankisnotgoverned,asarule,by
the Corporation Code, but by its Charter. (Gonzales vs. PNB,
122SCRA489.)
o0o

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