Philippine Association of Stock Transfer and Registry Agencies, Inc. v. CA
Philippine Association of Stock Transfer and Registry Agencies, Inc. v. CA
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G.R. No. 137321. October 15, 2007.
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SUPREME COURT REPORTS ANNOTATED VOLUME 536 2/2/20, 3:36 PM
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* SECOND DIVISION.
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directors acts in good faith but has the power to cases where there is
involved an act which if pursued may cause grave or irreparable
injury or prejudice to the investing public.·In Philippine Stock
Exchange, Inc. v. Court of Appeals, 281 SCRA 232 (1997), the Court
held that the SEC is without authority to substitute its judgment
for that of the corporationÊs board of directors on business matters
so long as the board of directors acts in good faith. This Court notes,
however, that this case involves, not whether petitionerÊs actions
pertained to management prerogatives or whether petitioner acted
in good faith. Rather, this case involves the question of whether the
SEC had the power to enjoin petitionerÊs planned increase in fees
after the SEC had determined that said act if pursued may cause
grave or irreparable injury or prejudice to the investing public.
Petitioner was fined for violating the SECÊs cease-and-desist order
which the SEC had issued to protect the interest of the investing
public, and not simply for exercising its judgment in the manner it
deems appropriate for its business.
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SUPREME COURT REPORTS ANNOTATED VOLUME 536 2/2/20, 3:36 PM
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QUISUMBING, J.:
This is a petition
1
for review on certiorari seeking to reverse
the Decision dated June 17, 1998 of the Court of Appeals
2
in CA-G.R. SP No. 41320, as well as its Resolution dated
January 13, 1999, denying the motion for reconsideration.
The facts are as follows.
Petitioner Philippine Association of Stock Transfer and
Registry Agencies, Inc. is an association of stock transfer
agents principally engaged in the registration of stock
transfers in the stock-and-transfer book of corporations.
On May 10, 1996, petitionerÊs Board of Directors
unanimously approved a resolution allowing its members
to increase the transfer processing fee they charge their
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SUPREME COURT REPORTS ANNOTATED VOLUME 536 2/2/20, 3:36 PM
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SUPREME COURT REPORTS ANNOTATED VOLUME 536 2/2/20, 3:36 PM
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3 Id., at p. 52.
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4 Id., at p. 58.
5 SEC. 40. Power of the Commission with respect to securities related
organizations.·The Commission shall have the power to grant license as
a condition for, and to regulate, supervise, examine, suspend or otherwise
discontinue, the operation of organizations whose operations are related
to or connected with the securities market such as but not limited to
clearing houses, securities deposi
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I.
II.
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III.
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8 Id., at p. 18.
9 Id., at pp. 162-165.
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xxxx
SEC. 3. The Commission shall have absolute jurisdiction, supervision and
control over all corporations, partnerships or associations, who are the grantees
of primary franchise and/or a license or permit issued by the government to
operate in the Philippines; . . .
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SUPREME COURT REPORTS ANNOTATED VOLUME 536 2/2/20, 3:36 PM
counsel.
Moreover, it devolved upon petitioner to protect its
interests adequately considering the clear implications of
the Order of July 8, 1996. Petitioner had only itself to
blame for its failure to present its evidence during the July
11, 1996 hearing. 13
In Philippine Stock Exchange, Inc. v. Court of Appeals,
the Court held that the SEC is without authority to
substitute its judgment for that of the corporationÊs board
of directors on business matters so long as the board of
directors acts in good faith. This Court notes, however, that
this case involves, not whether petitionerÊs actions
pertained to management prerogatives or whether
petitioner acted in good faith. Rather, this case involves the
question of whether the SEC had the power to enjoin
petitionerÊs planned increase in fees after the SEC had
determined that said act if pursued may cause grave or
irreparable injury or prejudice to the investing public.
Petitioner was fined for violating the SECÊs cease-and-
desist order which the SEC had issued to protect the
interest of the investing public, and not simply for
exercising its judgment in the manner it deems appropriate
for its business.
The regulatory and supervisory powers of the
Commission under Section 40 of the then Revised
Securities Act, in our view, were broad enough to include
the power to regulate petitionerÊs fees. Indeed, Section 47
gave the Commission the power to enjoin motu proprio any
act or practice of petitioner which could cause grave or
irreparable injury or prejudice to the investing public. The
intentional omission in the law of
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