SECURITIES AND EXCHANGE COMMISSION, Petitioner,
THE HONORABLE COURT OF APPEALS, OMICO CORPORATION, EMILIO S. TENG AND TOMMY KIN HING TIA, Respondents.
G.R. No. 187702 October 22, 2014
TOPIC: SRC, proxy, jurisdiction of SEC
Omico Corporation (Omico) is a company whose shares of stock are listed and traded in the Philippine Stock Exchange, Inc. Astra Securities Corporation (Astra) is one of the stockholders of Omico owning about 18% of the latter’s outstanding capital stock.
Omico scheduled its annual stockholders’ meeting on 3 November 2008. It set the deadline for submission of proxies on 23 October 2008 and the validation of proxies on 25 October 2008.
Astra objected to the validation of the proxies issued in favor of Tia, representing about 38% of the outstanding capital stock of Omico. Astra also objected to the inclusion of the proxies issued in favor of Tia and/or Martin Buncio, representing about 2% of the outstanding capital stock of Omico.
Astra maintained that the proxy issuers, who were brokers, did not obtain the required express written authorization of their clients when they issued the proxies in favor of Tia. In so doing, the issuers were allegedly in violation of SRC Rules. Furthermore, the proxies issued in favor of Tia exceeded, thereby giving rise to the presumption of solicitation thereof under said rules. Tia did not also comply with the rules on proxy solicitation, in violation of the SRC.
Despite the objections of Astra, Omico’s Board of Inspectors declared that the proxies issued in favor of Tia were valid.
- Whether or not SEC has jurisdiction over controversies arising from the validation of proxies for the election of the directors of a corporation.
- Whether or not SEC may appeal a reversal of its ruling.
FIRST ISSUE: None.
The Court held that when proxies are solicited in relation to the election of corporate directors, the resulting controversy, even if it ostensibly raised the violation of the SEC rules on proxy solicitation, should be properly seen as an election controversy within the original and exclusive jurisdiction of the trial courts by virtue of Section 5.2 of the SRC. Hence, the jurisdiction is still with the Special Commercial Courts.
An election contest covers any controversy or dispute involving the validation of proxies, in general. Thus, it can only refer to all the beneficial purposes that validation of proxies can bring about when made in connection with a forthcoming election of directors. Thus, there is no point in making distinctions between who has jurisdiction before and who has jurisdiction after the election of directors, as all controversies related thereto – whether before, during or after – shall be passed upon by regular courts as provided by law.
SECOND ISSUE: No.
The Court held that quasi-judicial agencies do not have the right to seek the review of an appellate court decision reversing any of their rulings. This is because they are not real parties-in-interest. Thus, the Court expunged the petition filed by the SEC for the latter’s lack of capacity to file the suit.