Union Glass Vs SEC

SUPREME COURT REPORTS ANNOTATED VOLUME 126 07/02/2017, 7(49 PM
VOL. 126-, NOVEMBER 28, 1983 31

Union Glass & Container Corporation vs. Securities and
Exchange Commission
*
No. L-64013. November 28, 1983.
UNION GLASS & CONTAINER CORPORATION and

CARLOS PALANCA, JR., in his capacity as President of
Union Glass & Container Corporation, petitioners, vs. THE
SECURITIES AND EXCHANGE COMMISSION and
CAROLINA HOFILEA, respondents.
Jurisdiction; Corporation Law; Requisites for Securities and

Exchange Commission to have jurisdiction over a case.Otherwise
stated, in order that the SEC can take cognizance of a case, the
controversy must pertain to any of the following relationships: [a]
between the corporation, partnership or association and the public;
[b] between the corporation, partnership or association and its
stockholders, partners, members, or officers; [c] between the
corporation, partnership or association and the state in so far as its
franchise, permit or license to operate is concerned; and [d] among
the stockholders, partners or associates themselves.
Same; Same; Where a defendant in a complaint filed before the
S.E.C. has no intra-corporate relationship with the complainant it
cannot be joined as party-defendant in the S.E.C. case.As
heretofore pointed out, petitioner Union Glass is involved only in
the first cause of action of Hofilea's complaint in SEC Case No.
2035. While the Rules of Court, which applies suppletorily to
proceedings before, the SEC, allows the joinder of causes of action
in one complaint, such procedure however is subject to the rules
regarding jurisdiction, venue and joinder of parties. Since petitioner
has no intra-corporate relationship with the complainant, it cannot
be joined
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_________________
* EN BANC.
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32 SUPREME COURT REPORTS ANNOTATED
Union Glass & Container Corporation vs. Securities and Exchange

Commission
as party-defendant in said case as to do so would violate the rule on

jurisdiction. Hofilea's complaint against petitioner for cancellation
of the sale of the glass plant should therefore be brought separately
before the regular court. But such action, if instituted, shall be
suspended to await the final outcome of SEC Case No. 2035, for the
issue of the validity of the dacion en pago posed in the last
mentioned case is a prejudicial question, the resolution of which is a
logical antecedent of the issue involved in the action against
petitioner Union Glass. Thus, Hofilea's complaint against the
latter can only prosper if final judgment is rendered in SEC Case
No. 2035, annulling the dacion en pago executed in favor of the
DBP.
Teehankee, .J, concurring:
Jurisdiction; Corporation; Action; The suit that Hofilea may

bring against Union Glass in the regular courts of justice is subject
to all other defenses that it may interpose, such as being a buyer in
good faith, even if the dacion en pago is annulled.The purpose of
this brief concurrence is with reference to the statement in the
Court's opinion that "Thus, Hofilea's complaint against the latter
can only prosper if final judgment is rendered in SEC Case No.
2035, annulling the dacion en pago executed in favor of the DBP," to
erase any impression that a favorable judgment secured by Hofilea
in SEC Case No. 2035 against the DBP and Pioneer Glass would
necessarily mean that its action against Union Glass in the regular
courts of justice for recovery and cancellation of the DBP sale of the
glass plant to Union Glass would necessarily prosper. It must be
borne in mind that as already indicated, the SEC has no
jurisdiction over Union Glass as an outsider. The suit in the regular

courts of justice that Hofilea might bring against Union Glass is of
course subject to all defenses as to the validity of the sale of the
glass plant in its favor as a buyer in good faith and should it
successfully substantiate such defenses, then Hofilea's action
against it for cancellation of the sale might fail as a consequence.
Aquino, J., dissenting:
Certiorari; Administrative Law; Petitioners are guilty of laches

and non-exhaustion of administrative remedies.ln this case, the
SEC seems to have adopted the orders of the two hearing officers as
its own orders as shown by the stand taken by the Solicitor General
in defending the SEC. If that were so, that is, if the orders of the
33
VOL. 126, NOVEMBER 28, 1983 33
Union Glass & Container Corporation vs. Securities and Exchange

Commission
hearing officers should be treated as the orders of the SEC itself en

banc, this Court would have no jurisdiction over this case. It should
be the Appellate Court that should exercise the power of review.
Action; Jurisdiction; Mere joinder of another defendant in a
S.E.C. case with which complainant has no intra-corporate
relationship should not divest S.E.C. of jurisdiction over said other
defendant which has a privity of interest with the corporation
wherein complainant is a stockholder.Certainly, the joinder of
Union Glass does not divest the SEC of jurisdiction over the case.
The joinder of Union Glass is necessary because the DBP, its
transferor, is being sued regarding the dacion en pago. The defenses
of Union Glass are tied up with the defenses of the DBP in the
intracorporate dispute. Hofilea's cause of action should not be
split. It would not be judicious and expedient to require Hofilea to
sue the DBP and Union Glass in the Regional Trial Court. The SEC
is more competent than the said court to decide the intra-corporate
dispute.
PETITION for certiorari and prohibition to review the
order of the Securities and Exchange Commission.
The facts are stated in the opinion of the Court.

Eduardo R. Ceniza for petitioners.
The Solicitor General for respondent SEC.
Remedios C. Balbin for respondent Carolina Y.
Hofilea.
ESCOLIN, J.:
This petition for certiorari and prohibition seeks to annul

and set aside the Order of the Securities and Exchange
Commission, dated September 25, 1981, upholding its
jurisdiction in SEC Case No. 2035, entitled "Carolina
Hofilea, Complainant, versus Development Bank of the
Philippines, et al., Respondents."
Private respondent Carolina Hofilea, complainant in
SEC Case No. 2035, is a stockholder of Pioneer Glass
Manufacturing Corporation, Pioneer Glass for short, a
domestic corporation engaged in the operation of silica
mines and the manufacture of glass and glassware. Since
1967,
34

Exchange Commission
Pioneer Glass had obtained various loan accommodations

from the Development Bank of the Philippines [DBP], and
also from other local and foreign sources which DBP
guaranteed.
As security for said loan accommodations, Pioneer Glass
mortgaged and/or assigned its assets, real and personal, to
the DBP, in addition to the mortgages executed by some of
its corporate officers over their personal assets. The
proceeds of said financial exposure of the DBP were used in
the construction of a glass plant in Rosario, Cavite, and the
operation of seven silica mining claims owned by the
corporation.
It appears that through the conversion into equity of the
accumulated unpaid interests on the various loans

amounting to P5.4 million as of January 1975, and
subsequently increased by another P2.2 million in 1976,
the DBP was able to gain control of the outstanding shares
of common stocks of Pioneer Glass, and to get two, later
three, regular seats in the corporation's board of directors.
Sometime in March, 1978, when Pioneer Glass suffered
serious liquidity problems such that it could no longer meet
its financial obligations with DBP, it entered into a dacion
en pago agreement with the latter, whereby all its assets
mortgaged to DBP were ceded to the latter in full
satisfaction of the corporation's obligations in the total
amount of P59,000,000.00. Part of the assets transferred to
the DBP was the glass plant in Rosario, Cavite, which DBP
leased and subsequently sold to herein petitioner Union
Glass and Container Corporation, hereinafter referred to as
Union Glass.
On April 1, 1981, Carolina Hofilea filed a complaint
before the respondent Securities and Exchange
Commission against the DBP, Union Glass and Pioneer
Glass, docketed as SEC Case No. 2035. Of the five causes of
action pleaded therein, only the first cause of action
concerned petitioner Union Glass as transferee and
possessor of the glass plant. Said first cause of action was
based on the alleged illegality of the aforesaid dacion en
pago resulting from: [1] the supposed unilateral and
unsupported undervaluation of the assets of Pioneer Glass
35
VOL. 126, NOVEMBER 28, 1983 35

Exchange Commission
covered by the agreement; [2] the self-dealing indulged in

by DBP, having acted both as stockholder/director and
secured creditor of Pioneer Glass; and [3] the wrongful
inclusion by DBP in its statement of account of P26M as
due from Pioneer Glass when the same had already been
converted into equity.
Thus, with respect to said first cause of action,
respondent Hofilea prayed that the SEC issue an order:
"1. Holding that the so called dacion en pago conveying

all the assets of Pioneer Glass and the Hofilea
personal properties to Union Glass be declared null
and void on the ground that the said conveyance
was tainted with.
"A. Self-dealing on the part of DBP which was acting

both as a controlling stockholder/director and as
secured creditor of the Pioneer Glass, all to its
advantage and to that of Union Glass, and to the
gross prejudice of the Pioneer Glass;
"B. That the dacion en pago is void because there was
gross undervaluation of the assets included in the
so-called dacion en pago by more than 100% to the
prejudice of Pioneer Glass and to the undue
advantage of DBP and Union Glass;
"C. That the DBP unduly favored Union Glass over
another buyer, San Miguel Corporation,
notwithstanding the clearly advantageous terms
offered by the latter to the prejudice of Pioneer
Glass, its other creditors and so-called 'minority
stockholders.'
"2. Holding that the assets of the Pioneer Glass taken

over by DBP and part of which was delivered to
Union Glass particularly the glass plant to be
returned accordingly.
"3. That the DBP be ordered to accept and recognize
the appraisal conducted by the Asian Appraisal Inc.
in 19751 and again in 1978 of the asset of Pioneer
Glass.''
In her common prayer, Hofilea asked that DBP be

sentenced to pay Pioneer Glass actual, consequential,
moral and exemplary damages, for its alleged illegal acts
and gross bad faith; and for DBP and Union Glass to pay
her a
________________
1 p. 38, Rollo.
36

Exchange Commission
2
reasonable amount as attorney's fees.
On April 21,1981, Pioneer Glass filed its answer. On
May 8, 1981, petitioners moved for dismissal of the case on
the ground that the SEC had no jurisdiction over the
subject matter or nature of the suit. Respondent Hofilea
filed her opposition to said motion, to which herein
petitioners filed a rejoinder.
On July 23, 1981, SEC Hearing Officer Eugenio E.
Reyes, to whom the case was assigned, granted the motion
to dismiss for lack of jurisdiction. However, on September
25, 1981, upon motion for reconsideration filed by
respondent Hofilea, Hearing Officer Reyes reversed his
original order by upholding the SEC's jurisdiction over the
subject matter and over the persons of petitioners. Unable
to secure a reconsideration of the Order as well as to have
the same reviewed by the Commission En Banc, petitioners
filed the instant petition for certiorari and prohibition to
set aside the order of September 25, 1981, and to prevent
respondent SEC from taking cognizance of SEC Case No.
2035.
The issue raised in the petition may be propounded
thus: Is it the regular court or the SEC that has
jurisdiction over the case?
In upholding the SEC's jurisdiction over the case
Hearing Officer Reyes rationalized his conclusion thus:
"As correctly pointed out by the complainant, the present action is

in the form of a derivative suit instituted by a stockholder for the
benefit of the corporation, respondent Pioneer Glass and
Manufacturing Corporation principally against another stockholder,
respondent Development Bank of the Philippines, for alleged illegal
acts and gross bad faith which resulted in the dacion en pago
arrangement now being questioned by complainant. These alleged
illegal acts and gross bad faith came about precisely by virtue of
respondent Development Bank of the Philippine's status as a
stockholder of co-respondent Pioneer Glass Manufacturing
Corporation although its status as such stockholder, was gained as

a result of its being a creditor of the latter. The derivative nature of
this instant action can also be gleaned from the common prayer of
________________
2 p. 40, Rollo.
37
VOL. 126, NOVEMBER 28, 1983 37

Exchange Commission
the complainant which seeks for an order directing respondent

Development Bank of the Philippines to pay co-respondent Pioneer
Glass Manufacturing Corporation damages for the alleged illegal
acts and gross bad faith as above-mentioned.
"As far as respondent Union Glass and Container Corporation is
concerned, its inclusion as a party-respondent by virtue of its being
an indispensable party to the present action, it being in possession
of the assets subject of the dacion en pago and, therefore, situated
3
in such a way that it will be affected by any judgment thereon. "
In the ordinary course of things, petitioner Union Glass, as

transferee and possessor of the glass plant covered by the
dacion en pago agreement, should be joined as party-
defendant under the general rule which requires the
joinder of every party who has an interest4 in or lien on the
property subject matter of the dispute. Such joinder of
parties avoids multiplicity of suits as well as ensures the
convenient, speedy and orderly administration of justice.
But since petitioner Union Glass has, no intra-corporate
relation with either the complainant or the DBP, its joinder
as party-defendant in SEC Case No, 2035 brings the cause
of action asserted against it outside the jurisdiction of the
respondent SEC,
The jurisdiction of the SEC is delineated by Section 5 of
PD No. 902-A as follows:
"Sec. 5. In addition to the regulatory and adjudicative function of

the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it as

expressly granted under existing laws and devices, it shall have
original and exclusive jurisdiction to hear and decide cases
involving:
a] Devices and schemes employed by or any acts, of the board of
directors, business associates, its officers or partners, amounting to
fraud and misrepresentation which may be detrimental to the
interest of the public and/or the stockholders, partners, members of
associations or organizations registered with the Commission;
________________
3 p. 24, Rollo.
4 59 Am. Jur. 2d 530.
38

Exchange Commission
b] Controversies arising out of intra-corporate or partnership

relations, between and among stockholders, members or associates;
between any or all of them and the corporation, partnership, or
association of which they are stockholders, members or associates,
respectively; and between such corporation, partnership or
association and the state insofar as it concerns their individual
franchise or right to exist as such entity;
c] Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships or
associations."
This grant of jurisdiction must be viewed in the light of the

nature and function of the SEC under the law. Section 3 of
PD No. 902-A confers upon the latter "absolute jurisdiction,
supervision, and control over all corporations, partnerships
or associations, who are grantees of primary franchise
and/or license or permit issued by the government to
operate in the Philippines x x x.' " The principal function of
the SEC is the supervision and control over corporations,
partnerships and associations with the end in view that
investment in these entities may be encouraged and
protected, and their activities

5
pursued for the promotion of
economic development.
It is in aid of this office that the adjudicative power of
the SEC must be exercised. Thus the law explicitly
specified and delimited its jurisdiction to matters
intrinsically connected with the regulation of corporations,
partnerships and associations and those dealing with the
internal affairs of such corporations, partnerships or
associations.
Otherwise stated, in order that the SEC can take
cognizance of a case, the controversy must pertain to any of
the following relationships: [a] between the corporation,
partnership or association and the public; [b] between the
corporation, partnership or association and its
stockholders, partners, members, or officers; [c] between
the corporation, partnership or association and the state in
so far as its franchise, permit or license to operate is
concerned; and [d] among the stockholders, partners or
associates themselves.
_________________
5 Vide, Whereas Clauses of P.D. 902-A.
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VOL. 126, NOVEMBER 28, 1983 39

Exchange Commission
The fact that the controversy at bar involves the rights of

petitioner Union Glass who has no intra-corporate relation
either with complainant or the DBP, places the suit beyond
the jurisdiction of the respondent SEC. The case should be
tried and decided by the court of general jurisdiction, the
Regional Trial Court. This view is in accord with the
rudimentary principle that administrative 6agencies, like
the SEC, are tribunals of limited jurisdiction and, as such,
could wield only such powers as are7
specifically granted to
them by their enabling statutes. As We8 held in Sunset
View Condominium Corp. vs. Campos, Jr.:
"Inasmuch as the private respondents are not shareholders of the

petitioner condominium corporation, the instant cases for collection
cannot be a 'controversy arising out of intra-corporate or
partnership relations between and among stockholders, members or
associates; between any or all of them and the corporation,
partnership or association of which they are stockholders, members
or associates, respectively,' which controversies are under the
original and exclusive jurisdiction of the Securities & Exchange
Commission, pursuant to Section 5 [b] of P.D. No. 902-A. x x x"
As heretofore pointed out, petitioner Union Glass is

involved only in the first cause of action of Hofilea's
"complaint in SEC Case No. 2035. While the Rules of
Court, which applies suppletorily to proceedings before the
SEC, allows the joinder of causes of action in one
complaint, such procedure however is subject to the9 rules
regarding jurisdiction, venue and joinder of parties. Since
petitioner has no intra-corporate relationship with the
complainant, it cannot be joined as party-defendant in said
case as to do so would violate the rule on jurisdiction.
Hofilea's complaint against petitioner for cancellation of
the sale of the glass plant should therefore be brought
separately before the regular court. But such action, if
instituted, shall be suspended to await the final
________________
6 2 Am. Jur. 2d. 150.

7 2 Am. Jur. 2d. 21.
8 104 SCRA 295.
9 Section 5, Rule 2 of the Rules of Court,
40

Exchange Commission
outcome of SEC Case No. 2035, for the issue of the validity
of the dacion en pago posed in the last mentioned case is a
prejudicial question, the resolution of which is a logical
antecedent of the issue involved in the action against
petitioner Union Glass. Thus, Hofilea's complaint against

the latter can only prosper if final judgment is rendered in
SEC Case No. 2035, annulling the dacion en pago executed
in favor of the DBP.
WHEREFORE, the instant petition is hereby granted,
and the questioned Orders of respondent SEC, dated
September 25, 1981, March 25, 1982 and May 28, 1982, are
hereby set aside. Respondent Commission is ordered to
drop petitioner Union Glass from SEC Case No. 2035,
without prejudice to the filing of a separate suit before the
regular court of justice. No pronouncement as to costs.
SO ORDERED.
Concepcion, Jr., Guerrero, Abad Santos, De Castro,

Melencio-Herrera, Plana, Relova and Gutierrez, Jr., JJ.,
concur.
Fernando, C.J. and Makasiar, J., join Aquino, J., in
his dissent.
Teehankee, J., files a brief concurrence.
TEEHANKEE, J., concurring:
I concur in the Court's judgment penned by Mr. Justice

Escolin setting aside the questioned orders of respondent
SEC and ordering that petitioner Union Glass be dropped
from SEC Case No. 2035 for lack of SEC jurisdiction over it
as a third party purchaser of the glass plant acquired by
the DBP by dacion en pago from Pioneer Glass, without
prejudice to Hofilea filing a separate suit in the regular
courts of justice against Union Glass for recovery and
cancellation of the said sale of the glass plant in favor of
Union Glass,
I concur also with the statement in the Court's opinion
that the final outcome of SEC Case No. 2035 with regard to
the validity of the dacion en pago is a prejudicial case. If
41
VOL. 126, NOVEMBER 28, 1983 41

Exchange Commission
Hofilea's complaint against said dacion en pago fails in

the SEC, then it clearly has no cause of action against
Union Glass for cancellation of DBP's sale of the plant to
Union Glass.
The purpose of this brief concurrence is with reference to
the statement in the Court's opinion that "Thus, Hofilea's
complaint against the latter can only prosper if final
judgment is rendered in SEC Case No. 2035, annulling the
dacion en pago executed in favor of the DBP," to erase any
impression that a favorable judgment secured by Hofilea
in SEC Case No. 2035 against the DBP and Pioneer Glass
would necessarily mean that its action against Union Glass
in the regular courts of justice for recovery and cancellation
of the DBP sale of the glass plant to Union Glass would
necessarily prosper. It must be borne in mind that as
already indicated, the SEC has no jurisdiction over Union
Glass as an outsider. The suit in the regular courts of
justice that Hofilea might bring against Union Glass is of
course subject to all defenses as to the validity of the sale of
the glass plant in its favor as a buyer in good faith and
should it successfully substantiate such defenses, then
Hofilea's action against it for cancellation of the sale
might fail as a consequence.
AQUINO, J., dissenting:
I dissent with due deference to Justice Escolin's opinion,

What are belatedly assailed in this certiorari and
prohibition case filed on May 17, 1983 are the order of
September 25, 1981 of Eugenio E. Reyes, a SEC hearing
officer, and the orders of March 25 and May 28, 1982 of
Antonio R. Manabat, another SEC hearing officer.
Although a jurisdictional issue is raised and jurisdiction
over the subject matter may be raised at any stage of the
case, nevertheless, the petitioners are guilty of laches and
nonexhaustion of the remedy of appeal with the Securities
and Exchange Commission en banc.
The petitioners resorted to the special civil actions of
certiorari and prohibition because they assail the orders of
42

Exchange Commission
mere SEC hearing officers. This is not a review of the order,

decision or ruling of the SEC sitting en banc which,
according to section 6 of Presidential Decree No. 902-A
(1976), may be made by this Court "in accordance with the
pertinent provisions of the Rules of Court.''
Rule 43 of the Rules of Court used to allow review by
this Court of the SEC order, ruling or decision. Republic
Act 5434 (1968) substituted the Court of Appeals for this
Court in line with the policy of lightening our heavy
jurisdictional burden. But this Court seems to have been
restored as the reviewing authority by Presidential Decree
No. 902-A.
However, section 9 of the Judiciary Reorganization Law
returned to the Intermediate Appellate Court the exclusive
jurisdiction to review the ruling, order or decision of the
SEC as a quasi-judicial agency. The same section 9 granted
to the Appellate Court jurisdiction in certiorari and
prohibition cases over the SEC although not exclusive.
In this case, the SEC seems to have adopted the orders
of the two hearing officers as its own orders as shown by
the stand taken by the Solicitor General in defending the
SEC. If that were so, that is, if the orders of the hearing
officers should -be treated as the orders of the SEC itself en
banc, this Court would have no jurisdiction over this case.
It should be the Appellate Court that should exercise the
power of review.
Carolina Hofilea has been a stockholder since 1958 of
the Pioneer Glass Manufacturing Corporation. Her
personal assets valued at P6,804,810 were apparently or
supposedly mortgaged to the DBP to secure the obligations
of Pioneer Glass (p. 32, Rollo).
Pioneer Glass became indebted to the Development
Bank of the Philippines in the total sum of P59,000,000.
Part of the loan was used by Pioneer Glass to establish its
glass plant in Rosario, Cavite. The unpaid interest on the
loan amounting to around seven million pesos became the
DBP's equity in Pioneer Glass. The DBP became a
substantial stockholder of Pioneer Glass. Three members of
the Pioneer Glass' board of directors were from the DBP.
43
VOL. 126, NOVEMBER 28, 1983 43

Exchange Commission
The glass plant commenced operations in 1977, At that

time, Pioneer Glass was heavily indebted to the DBP.
Instead of foreclosing its mortgage, DBP maneuvered to
have the mortgaged assets of Pioneer Glass, including the
glass plant, transferred to the DBP by way of dacion en
pago, This transaction was alleged to be an "auto contract"
or a case of the DBP contracting with itself since the DBP
had a dominant position in Pioneer Glass.
Hofilea alleged that although the debt to the DBP of
Pioneer Glass amounted to P59,000,000, the glass plant in
1977 had a "sound value" of P77,329,000 and a
"reproduction cost" of P90,403,000. She further alleged that
San Miguel Corporation was willing to buy the glass plant
for P40,000,000 cash, whereas it was actually sold to Union
Glass & Container Corporation for the same amount under
a 25-year term of payment (pp. 32-34, Rollo).
On March 31, 1981; Carmen Hofilea filed with the SEC
a complaint against the DBP, Union Glass, Pioneer Glass
and Rafael Sison as chairman of the DBP and Pioneer
Glass boards of directors. Union Glass filed a motion to
dismiss on the ground that jurisdiction over the case is
lodged in the Court of First Instance. Hofilea opposed the
motion. Hearing Officer Reyes in his order of July 23, 1981
dismissed the complaint on the ground that the case is
beyond the jurisdiction of the SEC.
Hofilea filed a motion for reconsideration which was
opposed by Union Glass. Hearing Officer Reyes in his order
of September 25, 1981 reconsidered his dismissal order and
ruled that Union Glass is an indispensable party because it
is the transferee of the controverted assets given by way of
dacion en pago to the DBP. He ruled that the SEC has
jurisdiction over the case.
Union Glass filed a motion for reconsideration. Hearing
Officer Antonio R. Manabat denied the motion on the
ground "that the present action is an intra-corporate
dispute involving stockholders of the same corporation (p.

26, Rollo).
Union Glass filed a second motion for reconsideration
with the prayer that the SEC should decide the motion en
banc. The
44

Exchange Commission
hearing officer ruled that the remedy of Union Glass was to

file a timely appeal. Hence, its second motion for
reconsideration was denied by the hearing officer. (This
ruling is a technicality which hinders substantial justice.)
It is clear that Union Glass has no cause of action for
certiorari and prohibition. Its recourse was to appeal to the
SEC en banc the denial of its first motion for
reconsideration.
There is no question that the SEC has jurisdiction over
the intra-corporate dispute between Hofilea and the DBP,
both stockholders of Pioneer Glass, over the dacion en pago.
Now, does the SEC lose jurisdiction because of the
joinder of Union Glass which has privity with the DBP
since it was the transferee of the assets involved in the
dacion en pago.
Certainly, the joinder of Union Glass does not divest the
SEC of jurisdiction over the case. The joinder of Union
Glass is necessary because the DBP, its transferor, is being
sued regarding the dacion en pago. The defenses of Union
Glass are tied up with the defenses of the DBP in the intra-
corporate dispute. Hofilea's cause of action should not be
split.
It would not be judicious and expedient to require
Hofilea to sue the DBP and Union Glass in the Regional
Trial Court. The SEC is more competent than the said
court to decide the intra-corporate dispute.
The SEC, as the agency enforcing Presidential Decree
No. 902-A, is in the best position to know the extent of its
jurisdiction. Its determination that it has jurisdiction in
this case has persuasive weight.
Petition granted.
Notes.On matter involving the affairs of an

unincorporated association, such as election contests for
officers of the Lions Club, the courts generally will not
interfere in the ruling of its policy-making body. (Lions
Club International vs. Amores, 121 SCRA 621.)
A chapter of a semi-charitable or religious corporation
can actively represent its mother organization as party in a
45
VOL. 126, NOVEMBER 29, 1983 45

Monsanto vs. Palarca
litigation. (Special Services Corp. vs. Centro La Paz, 121

SCRA 748.)
The present Corporation Law attaches a penal sanction
and denies access to courts and administrative tribunals to
foreign corporations doing business here without license.
(Home Ins. Co. vs. Eastern Shipping Lines, Inc., 123 SCRA
424.)
A stockholder enjoys no pre-emptive right to buy
unissued shares of originally authorized capital stock.
(Datu Tagonarao Benito vs. Securities and Exchange
Commission, 123 SCRA 722.)
The Philippine National Bank is not governed, as a rule,
by the Corporation Code, but by its Charter. (Gonzales vs.
PNB, 122 SCRA 489.)
o0o
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SUPREME COURT REPORTS ANNOTATED VOLUME 126 07/02/2017, 7(49 PM

VOL. 126-, NOVEMBER 28, 1983 31

UNION GLASS & CONTAINER CORPORATION and

Jurisdiction; Corporation Law; Requisites for Securities and

32 SUPREME COURT REPORTS ANNOTATED

Union Glass & Container Corporation vs. Securities and Exchange

as party-defendant in said case as to do so would violate the rule on

Teehankee, .J, concurring:

Jurisdiction; Corporation; Action; The suit that Hofilea may

jurisdiction over Union Glass as an outsider. The suit in the regular

Aquino, J., dissenting:

Certiorari; Administrative Law; Petitioners are guilty of laches

VOL. 126, NOVEMBER 28, 1983 33

Union Glass & Container Corporation vs. Securities and Exchange

hearing officers should be treated as the orders of the SEC itself en

PETITION for certiorari and prohibition to review the

order of the Securities and Exchange Commission.

The facts are stated in the opinion of the Court.

This petition for certiorari and prohibition seeks to annul

34 SUPREME COURT REPORTS ANNOTATED

Pioneer Glass had obtained various loan accommodations

accumulated unpaid interests on the various loans

VOL. 126, NOVEMBER 28, 1983 35

covered by the agreement; [2] the self-dealing indulged in

"1. Holding that the so called dacion en pago conveying

"A. Self-dealing on the part of DBP which was acting

"2. Holding that the assets of the Pioneer Glass taken

In her common prayer, Hofilea asked that DBP be

36 SUPREME COURT REPORTS ANNOTATED

"As correctly pointed out by the complainant, the present action is

Corporation although its status as such stockholder, was gained as

VOL. 126, NOVEMBER 28, 1983 37

the complainant which seeks for an order directing respondent

In the ordinary course of things, petitioner Union Glass, as

"Sec. 5. In addition to the regulatory and adjudicative function of

partnerships and other forms of associations registered with it as

38 SUPREME COURT REPORTS ANNOTATED

b] Controversies arising out of intra-corporate or partnership

This grant of jurisdiction must be viewed in the light of the

protected, and their activities

5 Vide, Whereas Clauses of P.D. 902-A.

VOL. 126, NOVEMBER 28, 1983 39

The fact that the controversy at bar involves the rights of

"Inasmuch as the private respondents are not shareholders of the

As heretofore pointed out, petitioner Union Glass is

6 2 Am. Jur. 2d. 150.

40 SUPREME COURT REPORTS ANNOTATED

petitioner Union Glass. Thus, Hofilea's complaint against

Concepcion, Jr., Guerrero, Abad Santos, De Castro,

TEEHANKEE, J., concurring:

I concur in the Court's judgment penned by Mr. Justice

VOL. 126, NOVEMBER 28, 1983 41

Hofilea's complaint against said dacion en pago fails in

AQUINO, J., dissenting:

I dissent with due deference to Justice Escolin's opinion,

42 SUPREME COURT REPORTS ANNOTATED

Union Glass & Container Corporation vs. Securities and

mere SEC hearing officers. This is not a review of the order,

VOL. 126, NOVEMBER 28, 1983 43