Republic of the
Supreme Court
THIRD DIVISION
LUZ GARCIA, JUSTO G.R.
No. 161338
LUKBAN, ALICE ADEVA,
MARCEL LUKBAN, WAVA
ANN BAYLON, PAMELA
ROSANNA APUYA, ALBERTO
GARCIA, JR., AIDA FERRER
and JANET VENIDA,
Petitioners,
Present:
YNARES-SANTIAGO,
J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CALLEJO,
SR.,
CHICO-NAZARIO,
and
NACHURA,
JJ.
ROMULO M. ADEVA, CEZAR
E. ECHANO and LIBRADO
GUERRA, Promulgated:
Respondents. *
x- - - - - - - - - - - - - - - - - - - - - - - - - -- - - -
- - - - - - - - - - - - - - - - - x
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Assailed in the
present Petition for Review on Certiorari is the Decision[1] of the
Court of Appeals (CA) dated September 18, 2002 nullifying the Resolution dated
July 11, 2000 of the Securities and Exchange Commission (SEC) En Banc
and reinstating the Order dated
The petition stemmed from a dispute
between two groups of shareholders within the Mabini
College, Inc. (Mabini), with petitioners comprising
the Garcia-Lukban group, and respondents, the Adeva group.
Sometime in 1995, petitioners filed
SEC LEO Case No. 95-0005 (EB 496), a petition for Annual Elections of Stockholders and SEC
Supervision in the Procedural Matter of Corporate Inspection with Mandatory
Injunction, wherein a committee was composed for the reconstitution of Mabini’s stock and transfer books.
On P1,081,200.00) Pesos or Ten
Thousand Two Hundred (P10,200.00) Pesos per share.[3] The bidding, however, was deferred to
Thus, petitioners filed on August 31,
1999, SEC Case No. 08-99-6398 seeking to enjoin the scheduled sale, alleging
that since 1983, respondent Romulo Adeva (Adeva) intentionally
failed to call a stockholders meeting for the election of Mabini’s
Board of Trustees on the pretext that its stock and transfer books are missing,
ensuring his indefinite tenure as President of the corporation. Petitioners prayed that the impending sale be
enjoined on the grounds that the authority given by the Board of Trustees to
the PBAC contravenes Section 9 of the Corporation Code which gives the Board of
Directors or Trustees the right to dispose said shares for a reasonable price
fixed by the Board; that the scheme to bid out the shares is violative of the stockholders’ preemptive right to purchase
treasury shares;[5]
that the stock and transfer book of Mabini has yet to
be reconstituted; that as of the date of
filing of the petition, there is no official list of stockholders of Mabini; and, that
two members of the PBAC, namely: Cesar
F. Echano (Echano) and Librado Guerra (Guerra) are not registered stockholders
of Mabini.[6]
Then SEC Chairman Perfecto Yasay, Jr. issued a temporary restraining order (TRO) on
On September 23, 1999, after the
expiration of the TRO, the PBAC re-scheduled the sale of the shares on
September 28, 1999 at 1:00 to 3:00 p.m.[7] But before said date came, the Hearing Panel issued
an Order dated September 27, 1999 granting the issuance of a writ of
preliminary injunction, and enjoining the sale of the treasury shares, subject
to the posting of an injunction bond in the amount of P50,000.00.[8]
Attempt was made to serve a copy of
the SEC Order in the morning of
As a result, petitioners filed an
Omnibus Motion praying that the sale of the treasury shares be nullified and
that respondents be cited in indirect contempt.[11]
The Hearing Panel denied petitioners’
Omnibus Motion per its Order dated March 13, 2000, finding that there is no
ground to nullify the sale or hold respondents in indirect contempt since at
the time the sale was held, petitioners had yet to post an injunction bond
which was done only on October 8, 1999, or 10 days after the scheduled sale.[12]
Petitioners appealed to the SEC En
Banc, and in its Resolution dated July 11, 2000, it affirmed the Hearing
Panel’s finding that respondents may not be held in indirect contempt as the
injunction order was released “with some defects,” but it nullified the sale of
the treasury shares based on the Hearing Panel’s “prima facie” finding
that it lacked authority from Mabini’s Board of
Trustees.[13]
This prompted respondents to file a
petition for review with the CA.
On
The CA denied
petitioners’ motion for reconsideration per Resolution dated
Petitioners are now before the Court alleging that:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE SEC DELVED ON MATTERS WHICH WERE NOT LAID BEFORE IT IN THE PETITION FOR CERTIORARI.
II. THE HONORABLE
COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT FOUND THAT THE
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT UPHELD THE HEARING PANEL’S FINDING THAT THERE IS NO GROUND TO NULLIFY THE BIDDING AND AWARD OF TREASURY SHARES SINCE NO WRIT HAS BEEN ISSUED PREVENTING SUCH BIDDING.[17]
The Petition must be denied.
However, it must first be made clear whether the petition filed by petitioners docketed as SEC Case No. 08-99-6398 is one which seeks only an ancillary remedy or one for Injunction, as a principal action.
The prayer of the Petition reads:
PRAYER
WHEREFORE,
the foregoing premises considered, it is most respectfully prayed of this
Honorable Commission that:
1. Upon the filing of this petition, a Temporary
Restraining Order (TRO) be issued directing respondents, their agents or
representatives to cease and desist from offering for sale the treasury shares
of Mabini College, Inc. in a bidding to be held for
the purpose, on 4 September 1999, at 12:00 noon, at the Case Room of the Mabini College, Daet Camarines Norte.
2. After due proceedings, said injunction be
made permanent.
OTHER
RELIEFS, just and equitable under the premises are likewise prayed for.[18]
At first glance, it seems obvious that petitioners’ action is only to enjoin respondents Adeva, in his capacity as member of the Board of Trustees and President of Mabini, Echano, Lydia E. Cacawa, and Guerra, as Chairmen and Members, respectively of the PBAC of Mabini, “from offering for sale the treasury shares of Mabini College in a bidding to be held for the purpose, on September 4, 1999 at 12:00 noon.”
Garayblas v. Atienza, Jr.[19] is instructive, to wit:
Injunction
is a judicial writ, process or proceeding whereby a party is ordered to do or
refrain from doing a certain act. It may
be the main action or merely a provisional remedy for and as an incident in the
main action. The Court has distinguished
the main action for injunction from the provisional or ancillary remedy of
preliminary injunction, thus:
The
main action for injunction is distinct from the provisional or ancillary remedy
of preliminary injunction which cannot exist except only as part or an incident
of an independent action or proceeding.
As a matter of course, in an action for injunction, the auxiliary remedy
of preliminary injunction, whether prohibitory or mandatory, may issue. Under the law, the main action for injunction
seeks a judgment embodying a final injunction which is distinct from, and
should not be confused with, the provisional remedy of preliminary injunction,
the sole object of which is to preserve the status quo until the merits
can be heard. A preliminary injunction
is granted at any stage of an action or proceeding prior to the judgment or
final order. It persists until it is
dissolved or until the termination of the action without the court issuing a
final injunction.[20]
Considering the fact that in this case petitioners also prayed that the injunction be made permanent; and considering the allegations in the petition that under Section 9 of the Corporation Code, the power to dispose treasury shares is given to the Board of Directors or Trustees and not to any other Committee created by the Board; that the bidding of treasury shares is a plot by the incumbent President Adeva to corner treasury shares in order to secure majority shareholdings for purposes of corporate control; and that the right of respondents Echano and Guerra to act as Members of the Board of the PBAC is “very dubious” because their names, as subsequent buyers of shares, are not recorded in the Stock and Transfer Book of Mabini which has been declared missing and has yet to be reconstituted,[21] the Court is convinced that SEC Case No. 08-99-6398 is a principal action for Injunction, not merely for an ancillary remedy of writ of preliminary injunction, wherein the main issues involved, among others, are: (1) whether the creation of the PBAC by the Board of Trustees is valid under the Corporation Code; (2) whether there was a quorum when the Board of Trustees authorized the sale of the treasury shares; and (3) whether respondents Echano and Guerra are bona fide shareholders. These issues are not involved in SEC LEO Case No. 95-0005 (EB 496). The latter case is a separate action which involves the annual elections of stockholders and SEC supervision in the procedural matter of corporate injunction as well as the reconstitution of Mabini’s stock and transfer books; and the reconstitution is still being undertaken at the time that SEC Case No. 08-99-6398 was filed by petitioners. Thus, SEC Case No. 08-99-6398 cannot even be referred to or consolidated with SEC LEO Case No. 95-0005 (EB 496). It is for the Hearing Panel in SEC Case No. 08-99-6398 to determine whether a final injunction may be issued under the facts and the law of the case.
The issue in the
present Petition for Review by Certiorari is whether the CA erred in
sustaining the Hearing Panel’s Order dated
Attacking the CA
Decision, petitioners claim that the CA erred in finding that the SEC En
Banc delved on matters which were not laid before it in the Petition for Certiorari
brought by petitioners questioning the denial of the Omnibus Motion by the
Hearing Panel.
To know whether the SEC En Banc went beyond the issue of the propriety of granting the writ of preliminary injunction in annulling the sale of the treasury shares, a look into the Omnibus Motion filed by petitioners with the Hearing Panel must be made as the Order dated March 13, 2000, denying the Omnibus Motion, is the precursor of the dispute at hand. It is from said motion where it can be determined what were the issues brought up to the SEC En Banc for resolution.
Petitioners’
Omnibus Motion sought the nullity of the sale of the treasury shares in a
bidding conducted by the PBAC and to hold respondents in contempt. The only reason given by petitioners in
claiming that the award of the treasury shares to the winning bidder was null
and void is that the bidding was made despite the issuance of a writ of
preliminary injunction by the Hearing Panel per its Order dated
In the record
however, is the petitioners’ bond in the amount of P50,000.00
pesos posted only on
Similarly,
and since no bond was immediately posted and no writ was issued, the
respondents cannot be charged of committing any act constituting indirect
contempt of the Commission. The
fact that the
Consequently, it was an error for the SEC En Banc to delve into the question whether the sale of the treasury shares lacked authority from the Board of Trustees, and to further flog the Hearing Panel for allegedly disregarding said issue in resolving the Omnibus Motion.
The Court does not
subscribe to petitioners’ argument that a resolution on the issue of the
legality of the corporate act authorizing the bidding sought to be enjoined is
essential in the appeal taken by them from the Hearing Panel Resolution dated
True, as stated by
the SEC En Banc, that the Order dated
It cannot be over emphasized that the lone ground relied upon by the Hearing Panel in denying petitioners’ motion to nullify the sale by PBAC of the treasury shares and to hold respondents in indirect contempt is petitioners’ failure to timely post a bond. Thus, any conclusive reliance on the alleged lack of authority of the Board of Trustees will, in effect, dispose of the case on the merits and would prematurely prejudge SEC Case No. 08-99-6398 without affording the parties the opportunity to rebut such prima facie finding.
Any discussion on the validity of the authority to sell the treasury shares by PBAC is premature. At best, the Hearing Panel’s finding on this score is merely preliminary, subject to a final ruling on the main case.
It is in this context that the Court finds that the CA should have refrained from dealing with the validity of the authority to sell the treasury shares. In the assailed Decision, the CA opined that it “cannot subscribe to the view that the sale of treasury shares lacked authority from the board of trustees x x x because it was precisely the board of trustees themselves that authorized the sale of the treasury shares through the PBAC.”[28] In effect, the CA went against its own previous ruling that it was grave abuse of discretion on the part of the SEC En Banc to resolve the matter.
The Court sustains
the reinstatement of the Hearing Panel’s Order dated
Sec. 4, Rule 58 of the 1997 Rules of Civil Procedure states:
Sec. 4. Verified application and bond
for preliminary injunction or temporary
restraining order. - A preliminary injunction
or temporary restraining order may be granted only when:
(a) The
application in the action or proceeding is verified, and shows facts entitling
the applicant to the relief demanded; and
(b) Unless
exempted by the court, the applicant files with the court where the action or
proceeding is pending, a bond executed to the party or person
enjoined, in an amount to be fixed by the court, to the effect that the
applicant will pay to such party or person all damages which he may sustain by
reason of the injunction or temporary restraining order if
the court should finally decide that the applicant was not entitled
thereto. Upon approval of the
requisite bond, a writ of preliminary
injunction shall be issued.
x x x
x (Emphasis
supplied).
Also, as stated by the Hearing Panel, the posting of the
injunction bond is required by the SEC New Rules of Procedure, to wit:
SECTION 1. Issuance of Preliminary Injunction. - A preliminary injunction may be granted by the Hearing Officer, upon bond filed with the Commission to be fixed by the Hearing Officer, at any time after the commencement of the action and before judgment when it is established after notice and hearing:
x x x x (Emphasis supplied).
A preliminary
injunction or TRO may be granted only when, among others, the
applicant, unless exempted by the court, files with the court where the action
or proceeding is pending, a bond executed to the party or
person enjoined, in an amount to be fixed by the court, to the effect that the
applicant will pay such party or person all damages which he may sustain by
reason of the injunction or TRO if the court should finally
decide that the applicant was not entitled thereto. Upon approval of the requisite bond,
a writ of preliminary injunction
shall be issued.[29] It has been ruled that the posting of a bond is a condition sine
qua non in order that the writ of preliminary injunction may issue.[30]
Furthermore, respondents cannot be faulted
for pushing through with the bidding and sale of the treasury shares. As the facts have it, the Order dated
Consequently, the
CA is correct in nullifying the SEC En Banc Decision and in reinstating
the Order dated
WHEREFORE, the petition is DENIED
for lack of merit.
Costs against petitioners.
SO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate
Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
ROMEO J. CALLEJO, SR. MINITA V. CHICO-NAZARIO
Associate
Justice Associate Justice
ANTONIO EDUARDO B. NACHURA
Associate Justice
ATTESTATION
I attest that
the conclusions in the above Decision had been reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
C E R T I F I C A T I O N
Pursuant to
Section 13, Article VIII of the Constitution, and the Division Chairperson’s
attestation, it is hereby certified that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.
REYNATO S. PUNO
* The Court of Appeals as respondent, is deleted from the title, pursuant to Section 4, Rule 45 of the Rules of Court.
[1] Penned by Associate Justice Elvi John S. Asuncion, with Associate Justices Portia Aliño-Hormachuelos and Juan Q. Enriquez, Jr. concurring; CA rollo, pp. 401-410.
[2]
[3]
[4]
[5]
[6]
[7]
[8] Rollo, p. 69.
[9] CA rollo, p. 162
[10]
[11]
[12] Id at 132-135
[13]
[14]
Rollo,
pp. 53-62.
[15]
CA rollo,
pp. 407-409.
[16]
Rollo,
p. 64.
[17]
[18]
[19]
G.R. No. 149493,
[20]
[21]
Petition, Annex “I”, rollo, p. 92.
[22]
[23]
[24]
[25]
[26]
[27]
[28] CA rollo, p. 408.
[29] Paramount Insurance Corporation v. Court of Appeals, 369 Phil. 641, 648 (1999).
[30] San Miguel v. Elbinias, 212 Phil. 291, 297 (1984).
[31] CA rollo, p. 133.