G.R. No. 167041, 17 June 2008


Another group, known as the Asistio group, composed of Luis A. Asistio, Lazaro L. Madara, Alfredo D. Roa III, Joaquin T. Venus, and Jose Ma. Carlos L. Zumel, claimed that the Marcelo group acquired shares in PIRC as mere trustees for the Asistio group. The Marcelo group allegedly executed a waiver of pre-emptive right, blank deeds of assignment, and blank deeds of transfer; endorsed in blank their respective stock certificates over all of the outstanding capital stock registered in their names; and completed the blank deeds in 2002 to effect transfers to the Asistio group.

The Company Registration and Monitoring Department (CRMD) of the SEC issued a certification stating that verification made on the available records of PIRC showed failure to register its stock and transfer book (STB).

On August 7, 2002, the Asistio group registered PIRC’s STB. Upon learning of this, PIRC’s assistant corporate secretary, Celedonio Escaño, Jr., requested the SEC for a certification of the registration in 1979 of PIRC’s STB. Escaño presented the 1979-registered STB bearing the SEC stamp and the signature of the officer in charge of book registration.

Meanwhile, the Asistio group filed a complaint against the Marcelo group. The Asistio group prayed that the Marcelo group be enjoined from acting as directors of PIRC, from physically holding office at PIRC’s office, and from taking custody of PIRC’s corporate records.

Then, the CRMD of the SEC issued a letter recalling the certification it had issued on August 6, 2002 and canceling the 2002-registered STB. However, one Kennedy B. Sarmiento requested the SEC not to cancel the 2002-registered STB. The SEC thus scheduled a conference to determine which of the two STBs is valid.

The Asistio group appealed to the SEC Board of Commissioners. They claimed that the issue of which of the two STBs is valid is intra-corporate in nature; hence, the RTC, not the SEC, has jurisdiction.


Does SEC have jurisdiction to recall and cancel a stock and transfer book (STB) which it issued?


YES. Under Section 5 of RA No. 8799, it can be said that the SEC’s regulatory authority over private corporations encompasses a wide margin of areas, touching nearly all of a corporation’s concerns. Under its regulatory responsibilities, the SEC may pass upon applications for, or may suspend or revoke (after due notice and hearing), certificates of registration of corporations, partnerships and associations (excluding cooperatives, homeowners’ association, and labor unions); compel legal and regulatory compliances; conduct inspections; and impose fines or other penalties for violations of the Revised Securities Act, as well as implementing rules and directives of the SEC, such as may be warranted.

Considering that the SEC, after due notice and hearing, has the regulatory power to revoke the corporate franchise — from which a corporation owes its legal existence — the SEC must likewise have the lesser power of merely recalling and canceling a STB that was erroneously registered.

Going to the particular facts of the instant case, the SEC has the primary competence and means to determine and verify whether the subject 1979 STB presented by the incumbent assistant corporate secretary was indeed authentic, and duly registered by the SEC as early as September 1979. As the administrative agency responsible for the registration and monitoring of STBs, it is the body cognizant of the STB registration procedures, and in possession of the pertinent files, records and specimen signatures of authorized officers relating to the registration of STBs. The evaluation of whether a STB was authorized by the SEC primarily requires an examination of the STB itself and the SEC files. This function necessarily belongs to the SEC as part of its regulatory jurisdiction. Contrary to the allegations of respondents, the issues involved in this case can be resolved without going into the intra-corporate controversies brought up by respondents.

*Case Digest by April Rose B. Tuanda, JD-IV, Andres Bonifacio Law School, S.Y 2019-2020