SECOND DIVISION
[G.R. No. 122787. February 9, 1999]
JUAN CALMA, EDMUNDO MAGLANGUE, SERGIO CAYANAN and SILVESTRE
LIWANAG, petitioners, vs. COURT OF APPEALS, SECURITIES AND EXCHANGE
COMMISSION, LUIS M. TARUC and NICODEMUS G. NASAL, respondents.
D E C I S I O N
BELLOSILLO, J.:
On 30 April 1990 private
respondents Luis M. Taruc and Nicodemus G. Nasal, Chairman and Secretary,
respectively, of HUKBALAHAP Veterans Association Inc. or HUKVETS filed a
letter-complaint with the Securities and Exchange Commission alleging that
sometime in 1987 petitioners Juan Calma, Edmundo Maglangue, Sergio Cayanan and
Silvestre Liwanag surreptitiously arrogated unto themselves the powers and
functions of trustees and officers of HUKVETS.
Taruc also alleged that on 15 May 1988 the group of Calma held a
convention without proper notice and without obtaining a quorum during which
nine (9) purportedly elected trustees of the HUKVETS ousted Taruc as
Chairman. Taruc likewise claimed that
the 12 March 1989 convention, where members of the Calma group were elected to
the Board of Trustees, was invalid.
Petitioner Liwanag denied Taruc’s
allegations and insisted that the convention held in 1988 was valid and that
all the members of HUKVETS were duly notified thereof.
When efforts to mediate and reach
an amicable settlement between the parties
failed, the Securites and Exchange Commission through its Prosecution
and Enforcement Department issued on 21 May 1992 a Resolution directing Taruc
to call within thirty (30) days a general membership meeting for the election
of seven (7) new members of the board.
Petitioner Liwanag, in a letter
dated 16 June 1992, objected to this Resolution. On 22 July 1992 he filed a Supplemental Petition/Motion Re:
PED Resolution dated May 21, 1992. While
the petition was pending, the 21 May 1992 Resolution of the Prosecution and
Enforcement Department was implemented with the election of the Board of
Directors of HUKVETS.
On 11 July 1994 the Securities and
Exchange Commission denied the Supplemental Petition/Motion Re: PED
Resolution dated May 21, 1992. Calma’s
Motion for Reconsideration was denied on 3 March 1995.
Petitioners went to the Court of
Appeals seeking to annul the 21 May 1992 Resolution of the Prosecution and
Enforcement Department. They alleged
that the Securities and Exchange Commission erred in sustaining the 21 May 1992
Resolution as its Prosecution and Enforcement Department was without
jurisdiction to entertain and adjudicate corporate election contests. The appellate court was unpersuaded and
ruled in its assailed decision of 26 September 1995 that -
The Commission can validly delegate the authority to exercise the specific powers assigned to it by law. The final paragraph of Section 6, PD 902-A states: “In the exercise of the foregoing authority and jurisdiction of the Commission, hearings shall be conducted by the Commission or by a Commissioner or by such other bodies, boards, committees and/or officers as may be created or designated by the Commission for the purpose.”
x x x x
Moreover, the respondent Commission, in its Order correctly said and We quote:
Jurisdiction over the subject matter of the controversy having been
duly established and investigated upon by the PED, the petitioners cannot now
claim that the former overstepped its powers and authority by issuing the
questioned Resolution since the petitioners herein have themselves waived any
jurisdictional infirmity, if there were any, when they appeared before the PED
and subsequently filed their answer to the letter-complaint. Thus, while jurisdiction over the subject
matter of the controversy cannot be waived, jurisdiction over the parties may
be acquired either by court process, by voluntary appearance in court or by submitting
pleadings in court which have (sic)
jurisdiction over the case x x x[1]
Their motion for reconsideration
having been denied by the appellate court in its resolution of 13 November
1995, petitioners now plead before us basically raising the issue of whether
the Prosecution and Enforcement Department of the Securities and Exchange
Commission has jurisdiction to investigate the 30 April 1990 letter-complaint
of private respondents. It is the rigorous stand of petitioners that the PED
has no such authority and jurisdiction, therefore its 21 May 1992 Resolution is
void and of no effect.
In Securities and Exchange
Commission v. Court of Appeals[2] this Court had occasion to discuss the powers and
functions of the SEC thus -
The Securities and Exchange Commission has both regulatory and adjudicative functions.
x x x x
Relative to its adjudicative authority, the SEC has original and exclusive jurisdiction to hear and decide controversies and cases involving -
(a) Intra-corporate and partnership relations between or among the corporation, officers and stockholders and partners, including their elections or appointments;
(b) State and corporate affairs in relation to the legal existence of corporations, partnerships and associations or to their franchises;
(c) Investors and corporate affairs, particularly in respect of devices and schemes, such as fraudulent practices, employed by directors, officers, business associates, and/or other stockholders, partners, or members or registered firms; as well as
(d) Petitions for suspension of payments filed by corporations, partnerships or associations possessing sufficient property to cover all their debts but which foresee the impossibility of meeting them when they respectively fall due, or possessing insufficient assets to cover their liabilities and said entities are upon petition or motu propio, placed under management of a Rehabilitation Receiver or Management Committee.
On the other hand, the inherent
powers and functions of the Prosecution and Enforcement Department of the
Securities and Exchange Commission are enumerated in Sec. 6 of P.D. No. 1758
which amended P.D. No. 902-A otherwise known as the Securities and Exchange
Commission Law. It provides -
Section 6. The Prosecution and Enforcement Department shall have, subject to the Commission’s control and supervision, the exclusive authority to investigate, on complaint or motu propio, any act or omission of the Board of Directors/Trustees of corporations, or of their stockholders, officers or partners, including any fraudulent devices, schemes or representations, in violation of any law or rules and regulations administered and enforced by the Commission, to file and prosecute in accordance with law and rules and regulations issued by the Commission; and in appropriate cases, the corresponding criminal or civil case before the Commission or the proper court or body upon prima facie finding of violation of any laws or rules and regulations administered and enforced by the Commission; and to perform such other powers and functions as may be provided by law or duly delegated to it by the Commission.
From the foregoing, it is clear
that the Securities and Exchange Commission, under its adjudicative
jurisdiction, has the power to hear and decide controversies involving
intra-corporate relations between and among members and officers of a
corporation. The Prosecution and
Enforcement Department was established as its adjudicative arm. As such, it is vested with the authority to
investigate, on complaint or motu propio, any act or omission of the
Board of Directors of corporations.
The instant controversy concerns
the intra-corporate relations between and among the officers of HUKVETS,
particularly between the group of Taruc and that of Calma. Thusly, it falls squarely within the
adjudicative powers of the Securities and Exchange Commission. When Taruc
and Nasal filed their letter-complaint
dated 30 April 1990 with the Securities and Exchange Commission they complained
of the alleged illegal acts of Calma and his group when the latter allegedly
usurped the functions of the duly elected members of the Board. This allegation definitely falls within the
jurisdiction of the Prosecution and Enforcement Department as enumerated in
Sec. 6 of P.D. 1758.
Clearly, the Prosecution and
Enforcement Department acted within its jurisdiction when it entertained and
acted on the letter-complaint. After
receipt of the letter-complaint of Taruc and Nasal, Calma and his group filed
their answer, and thereafter a series of exchanges took place. The letter-complaint was initially handled
by the Prosecution and Enforcement Department.
It was the Prosecution and Enforcement Department that investigated and
tried to mediate between the parties.
Both groups actively participated in the proceedings before it. By such participation, the Prosecution and
Enforcement Department acquired jurisdiction over the two (2) factions. Therefore, petitioners are now estopped from
alleging lack of jurisdiction on the part of the Prosecution and Enforcement
Department. They cannot now question
its 21 May 1992 Resolution after they have voluntarily appeared and pleaded
before it. As succinctly stated by the
Commission in its 11 July 1994 Order[3]-
The PED can investigate violations of law, rules and regulations enforced by this Commission on complaint or motu propio x x x . And while the PED’s powers and authority are merely investigatory, reportorial, recommendatory and prosecutory, it may likewise exercise such powers as may be delegated upon it by the Commission x x x .
The letter-complaint lodged by the appellees falls squarely within the jurisdiction of the Securities and Exchange Commission to hear and decide upon as provided for in PD No. 902-A, as amended. The same law does not prohibit the Commission from designating an officer or a division thereof to hear a case. Verily, therefore, the Commission can validly call upon any of its qualified departments to try a particular action including the PED to hear and make a preliminary ruling on the case. The questioned Resolution was cleared by the Commission en banc at a meeting held on May 26, 1992 thereby adopting it as its very own and thereby vesting unto that department power and authority to issue the same The approval of the Commission en banc of the issuance of the Resolution was the ultimate exercise of judgment of the Commission over the case.
Lastly, petitioners argue that
they were denied due process. Such
allegation is totally bereft of any factual or legal support. Administrative due process requires notice
and an opportunity to be heard before judgment is rendered. So long as the parties are given the
opportunity to explain their side, the requirements of due process are
satisfactorily complied with. In the
case before us, it cannot be denied that both parties were given all the
opportunity to explain their side.
First, efforts were made to mediate and settle the case amicably. When this failed, the parties actively
participated in the proceedings before the Prosecution and Enforcement
Department. This definitely belies the
claim of petitioners that they were denied due process.
WHEREFORE, the petition is DENIED. The Decision of respondent Court of Appeals dated 26 September
1995 sustaining the Resolution of the Prosecution and Enforcement Department of
the Securities and Exchange Commission dated 21 May 1992 as well as the SEC En
Banc Orders dated 11 July 1994 and 3 March 1995 is AFFIRMED.
Costs against petitioners.
SO ORDERED.
Puno, Mendoza, Quisumbing, and Buena, JJ., concur.