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SEC vs. CA, Omicro Corp. Et. Al., G.R. No. 187702 Astra Securities Corp. vs. Omicro Corp., Et. Al., G.R. No. 189014

The Supreme Court ruled that the Securities and Exchange Commission (SEC) does not have jurisdiction over controversies related to the validation of proxies for the election of corporate directors, as these matters fall under the purview of regular courts. The SEC's regulatory powers remain applicable for other voting matters, but the validation of proxies specifically for director elections is not within its jurisdiction. Consequently, the petition filed by the SEC was expunged due to lack of capacity, and the Court affirmed the decisions of the Court of Appeals.

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73 views1 page

SEC vs. CA, Omicro Corp. Et. Al., G.R. No. 187702 Astra Securities Corp. vs. Omicro Corp., Et. Al., G.R. No. 189014

The Supreme Court ruled that the Securities and Exchange Commission (SEC) does not have jurisdiction over controversies related to the validation of proxies for the election of corporate directors, as these matters fall under the purview of regular courts. The SEC's regulatory powers remain applicable for other voting matters, but the validation of proxies specifically for director elections is not within its jurisdiction. Consequently, the petition filed by the SEC was expunged due to lack of capacity, and the Court affirmed the decisions of the Court of Appeals.

Uploaded by

Jerickson A. Reyes
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SECURITIES AND EXCHANGE COMMISSION vs.

COURT OF APPEALS
G.R. No. 187702, October 22, 2014

ASTRA SECURITIES CORPORATION vs. OMICO CORPORATION


G.R. No. 189014, October 22, 2014
SERENO, CJ.

FACTS:

In this case, Omico Corporation 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. In relation to
the scheduled annual stockholder’s meeting, Astra objected to the validation of the proxies
issued in favor of Tommy Kin Hing Tia (Tia) and the inclusion of the proxies issued in favor of
Tia and/or Martin Buncio alleging violation of the Securities Regulation Code (SRC) rules on
proxy solicitation. Despite the objections of Astra, Omico’s Board of Inspectors declared that the
proxies issued in favor of Tia were valid. Astra filed a complaint against Omico before the
Securities and Exchange Commission. SEC issued a CDO enjoining Omico from accepting and
including the questioned proxies in determining a quorum and in electing the members of the
board of directors during the annual stockholders’ meeting. However, the said meeting still
proceeded. On appeal, the CA ruled that because controversies involving the validation of
proxies are considered election contests under the Interim Rules of Procedure Governing Intra-
Corporate Controversies, they are properly cognizable by the regular courts, not by the
Securities and Exchange Commission.

ISSUE

Whether SEC has jurisdiction over controversies arising from the validation of proxies for
the election of the directors of a corporation.

RULING:

No, the Supreme Court ruled that the power of the SEC to regulate proxies remains in
place in instances when stockholders vote on matters other than the election of directors. The
test is whether the controversy relates to such election. All matters affecting the manner and
conduct of the election of directors are properly cognizable by the regular courts. Otherwise,
these matters may be brought before the SEC for resolution based on the regulatory powers it
exercises over corporations, partnerships and associations. Indeed, the validation of proxies in
this case relates to the determination of the existence of a quorum.
Nonetheless, it is a quorum for the election of the directors, and, as such, which requires
the presence – in person or by proxy – of the owners of the majority of the outstanding capital
stock of Omico. Also, the fact that there was no actual 347 voting did not make the election any
less so, especially since Astra had never denied that an election of directors took place. Calling
to mind established jurisprudential principles, the Court therein ruled 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. So it must be in the
instant cases. Wherefore, the petition was expunged for lack of capacity of petitioner to file the
suit. The petition in G.R. No. 189014 was denied. The CA decisions were AFFIRMED.

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