Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=84636:march-61213&amp;catid=1594&amp;Itemid=566
Timestamp: 2019-04-26 04:22:07+00:00

Document:
G.R. No. 179047, March 11, 2015 - SECURITIES AND EXCHANGE COMMISSION, Petitioner, v. SUBIC BAY GOLF AND COUNTRY CLUB, INC. AND UNIVERSAL INTERNATIONAL GROUP DEVELOPMENT CORPORATION, Respondents.
SECURITIES AND EXCHANGE COMMISSION, Petitioner, v. SUBIC BAY GOLF AND COUNTRY CLUB, INC. AND UNIVERSAL INTERNATIONAL GROUP DEVELOPMENT CORPORATION, Respondents.
Intra-corporate controversies, previously under the Securities and Exchange Commission's jurisdiction, are now under the jurisdiction of Regional Trial Courts designated as commercial courts. However, the transfer of jurisdiction to the trial courts does not oust the Securities and Exchange Commission of its jurisdiction to determine if administrative rules and regulations were violated.
an 18 hole golf course that would meet the highest USGA and PGA standards.
Driving range of 30 berths provided with a roof and illuminated to afford nighttime driving.
Construction of additional 9-hole course.
The road/cart paths are fully concrete and passable, bridges, drainage and irrigation systems are in place.
There is a driving range with roof and 7 berths and one (1) tee house in hole # 3.
The construction of the additional 9-hole course has not yet started.
The clubhouse has a dining area, function room, 6 VIP rooms, sport shop, one (1) restaurant and men & ladies locker rooms. It has no sauna and massage rooms.
Beside the clubhouse is a swimming pool with no water and one (1) tennis court, [sic] that are both poorly maintained.
WHEREFORE, upon consideration of the foregoing, the complaint of REGINA S. FILART and MARGARITA G. VILLAREAL is hereby given DUE COURSE.
Respondents SUBIC BAY GOLF AND COUNTRY CLUB, INC. and UNIVERSAL INTERNATIONAL GROUP DEVELOPMENT CORPORATION, are hereby ordered to refund to REGINA S. FILART and MARGARITA G. VILLAREAL, within ten (10) days from receipt of this Order, the total purchase price of their shares of stock issued by Subic Bay Golf and Country Club, Inc., in the amount of P740,000.00 each, or a total of P1,480,000.00.
SUBIC BAY GOLF and COUNTRY CLUB, INC. is likewise hereby ordered to amend its Prospectus, reflecting therein the actual status of the facilities of the club, and to comply with the requirements of SRC Rule 14.
Furthermore, due to its failure to comply with its undertakings in its Registration Statement and Prospectus, tantamount to misrepresentation, and in violation of the provisions of the Securities Regulation Code, and its implementing rules and regulation, the Certificate of Registration and Permit to Sell Securities to the Public issued to respondent Subic Bay Golf and Country Club, Inc., are hereby SUSPENDED until the aforementioned misrepresentations are rectified and the requirements of this Order are complied with. The Commission shall make a determination, within thirty (30) days, whether or not such registration should be revoked.
And, pursuant to Section 54 of the Code, respondent corporations, SUBIC BAY GOLF AND COUNTRY CLUB, INC. and UNIVERSAL INTERNATIONAL GROUP DEVELOPMENT CORPORATION, are hereby fined the amount of P100,000.00.
WHEREFORE, in view of the foregoing, the PETITION is hereby DENIED. The July 1, 2003 ORDER of the Corporate Finance Department is hereby AFFIRMED.
WHEREFORE, the February 10, 2004 Decision of the Securities and Exchange Commission in CFD-AA-Case No. 08-03-36, affirming the July 1, 2003 Order of the Corporate Finance Department, insofar as it ordered the refund of the purchase price of the shares of stock of petitioner SBGCCI, is hereby declared NULL and VOID for lack of jurisdiction.
We determine which between the Securities and Exchange Commission and the Regional Trial Court has jurisdiction over this case. We also determine whether the Securities and Exchange Commission has the authority to order the return of purchase price of securities upon finding that there were fraudulent representations in the prospectus.
We rule for SBGCCI and UIGDC.
Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.
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 (1) 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 fully disposed.
The nature of the controversy test requires that the action involves the enforcement of corporate rights and obligations.
This case is an intra-corporate dispute, over which the Regional Trial Court has jurisdiction. It involves a dispute between the corporation, SBGCCI, and its shareholders, Villareal and Filart.
Villareal and Filart's right to a refund of the value of their shares was based on SBGCCI and UIGDC's alleged failure to abide by their representations in their prospectus. Specifically, Villareal and Filart alleged in their letter-complaint that the world-class golf course that was promised to them when they purchased shares did not materialize. This is an intra-corporate matter that is under the designated Regional Trial Court's jurisdiction. It involves the determination of a shareholder's rights under the Corporation Code or other intra-corporate rules when the corporation or association fails to fulfill its obligations.
However, even though the Complaint filed before the Securities and Exchange Commission contains allegations that are intra-corporate in nature, it does not necessarily oust the Securities and Exchange Commission of its regulatory and administrative jurisdiction to determine and act if there were administrative violations committed.
The Securities and Exchange Commission's approval of securities registrations signals to the public that the securities are valid. It provides the public with basis for relying on the representations of corporations that issue securities or financial instruments.
Any fraud or misrepresentation in the issuance of securities injures the public. The Securities and Exchange Commission's power to suspend or revoke registrations and to impose fines and other penalties provides the public with a certain level of assurance that the securities contain representations that are true, and that misrepresentations if later found, would be detrimental to the erring corporation. It creates risks to corporations that issue securities and adds cost to errors, misrepresentations, and violations related to the issuance of those securities. This protects the public who will rely on representations of corporations and partnerships regarding financial instruments that they issue. The Securities and Exchange Commission's regulatory power over securities-related activities is tied to the government's duty to protect the investing public from illegal and fraudulent instruments.
Thus, when Villareal and Filart alleged in their letter-complaint that SBGCCI and UIGDC committed misrepresentations in the sale of their shares, nothing prevented the Securities and Exchange Commission from taking cognizance of it to determine if SBGCCI and UIGDC committed administrative violations and were liable under the Securities Regulation Code. The Securities and Exchange Commission may investigate activities of corporations under its jurisdiction to ensure compliance with the law.
However, the Securities and Exchange Commission's regulatory power does not include the authority to order the refund of the purchase price of Villareal's and Filart's shares in the golf club. The issue of refund is intra-corporate or civil in nature. Similar to issues such as the existence or inexistence of appraisal rights, pre-emptive rights, and the right to inspect books and corporate records, the issue of refund is an intra-corporate dispute that requires the court to determine and adjudicate the parties' rights based on law or contract. Injuries, rights, and obligations involved in intra-corporate disputes are specific to the parties involved. They do not affect the Securities and Exchange Commission or the public directly.
Based on these provisions, Villareal and Filart may be entitled to a refund of the purchase price of their shares. Provisions giving shareholders rights, however, are not to be interpreted as sources of authority or jurisdiction when there is none. The provisions in the law or in the rules giving Villareal and Filart the right to be refunded the value of their shares are not equivalent to authority for the Securities and Exchange Commission to issue an order for the refund. Such order may not come from the Securities and Exchange Commission.
Neither the provisions of the implementing rules nor the provisions of the Securities Regulation Code,82 the law being implemented, give the Securities and Exchange Commission the power to order a refund. The Securities and Exchange Commission's power when violations of the Securities Regulation Code are found is limited to issuing regulatory orders such as suspending or revoking registration statements, providing for the terms and conditions for registration, and imposing fines and penalties.
The implementing rules cannot be interpreted to give the Securities and Exchange Commission the power that is more than what is provided under the Securities Regulation Code. Implementing rules are limited by the laws they implement. The rules cannot be used to amend, expand, or modify the law being implemented. The law shall prevail in case of inconsistency between the law and the rules.
As early as 1970, in the case of Teoxon vs. Members of the Board of Administrators (PVA), we ruled that the power to promulgate rules in the implementation of a statute is necessarily limited to what is provided for in the legislative enactment. Its terms must be followed for an administrative agency cannot amend an Act of Congress. "The rule-making power must be confined to details for regulating the mode or proceedings to carry into effect the law as it has been enacted, and it cannot be extended to amend or expand the statutory requirements or to embrace matters not covered by the statute." If a discrepancy occurs between the basic law and an implementing rule or regulation, it is the former that prevails.
. . . The rule-making power of a public administrative body is a delegated legislative power, which it may not use either to abridge the authority given it by Congress or the Constitution or to enlarge its power beyond the scope intended. Constitutional and statutory provisions control what rules and regulations may be promulgated by such a body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute.
Hence, the issue of refund should be litigated in the appropriate Regional Trial Court. This issue is both intra-corporate and civil in nature, which is under the jurisdiction of the designated Regional Trial Courts.
WHEREFORE, the Court of Appeals Decision dated July 31, 2007 is AFFIRMED.
* Designated additional member per Raffle dated 24 February 2010.
2 Id. at 44-71. The case, docketed as CA-G.R. SP No. 84292 and titled Subic Bay Golf and Country Club, Inc. and Universal International Group Development Corporation v. Regina S. Filart, Margarita G. Villareal and Securities and Exchange Commission, was penned by Associate Justice Jose Catral Mendoza and concurred in by Associate Justices Andres B. Reyes, Jr. (Chair) and Ramon M. Bato, Jr. of the Seventh Division of the Court of Appeals.
23 Id. The standards referred to were the United States Golf Association standards.
44 Id. at 45 and 108.
45 Id. at 110-127. The Petition for Review was filed pursuant to Rule 43 of the Rules of Court.
c. where material amendments have been made to the prospectus after the effective date thereof, purchasers may, within thirty (30) days from the date of such notification, renounce their purchase of securities, whereupon the issuer, or any person acting on behalf of the issuer in connection with the distribution of said securities, shall, within ten (10) days of receipt of notification of such election, return the contributions paid by such purchasers without making any deductions. Purchasers who decide not to renounce their purchase of securities shall be subject to the terms of the amended offering.
58 SEC. 143. Rule-making power of the Securities and Exchange Commission.—The Securities and Exchange Commission shall have the power and authority to implement the provisions of this Code, and to promulgate rules and regulations reasonably necessary to enable it to perform its duties hereunder, particularly in the prevention of fraud and abuses on the part of the controlling stockholders, members, directors, trustees or officers.
59 SEC. 5. Powers and Functions of the Commission.
67 Reorganization of the Securities and Exchange Commission with Additional Powers and Placing the Said Agency under the Administrative Supervision of the Office of the President.
69See Matting Industrial and Commercial Corporation, et al. v. Coros, 647 Phil. 324 (2010) [Per J. Bersamin, Third Division].
70Yujuico v. Quiambao, 542 Phil. 236, 247 (2007) [Per J. Sandoval-Gutierrez, First Division].
71 G.R. No. 181416, November 11, 2013, 709 SCRA 110 [Per J. Peralta, Third Division].
73See Medical Plaza Makati Condominium Corporation v. Cullen, G.R. No. 181416, November 11, 2013, 709 SCRA 110, 121 [Per J. Peralta, Third Division]. See also Gochan v. Young, 406 Phil. 663, 673-674 (2001) [Per J. Panganiban, Third Division].
76 Rep. Act No. 8799 (2000), sec. 2.
SEC. 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. . . .
h. To pass upon, refuse or deny, after consultation with the Board of Investments, Department of Industry, National Economic and Development Authority or any other appropriate government agency, the application for registration of any corporation, partnership or association or any form of organization falling within its jurisdiction, if their establishment, organization or operation will not be consistent with the declared national economic policies.
78 Pres. Decree No. 902-A (1976), sec. 3.
80 Rep. Act No. 8799 (2000).
81 Rep. Act No. 8799 (2000).
83 369 Phil. 568 (1999) [Per J. Pardo, First Division].

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.