MARIANO G. PINEDA, ARCADIO E. YABYABIN AND MAXIMINO PIZARRO, PETITIONERS, VS. HON. GREGORIO T. LANTIN, DISTRICT JUDGE OF THE COURT OF FIRST INSTANCE OF MANILA, BACOLOD-MURCIA MI…

MAY A COURT OF FIRST INSTANCE ENJOIN THE SECURITIES AND EXCHANGE
COMMISSION?

The facts from which this issue resulted are the following:

In a letter dated July 9, 1958, addressed to the Securities and Exchange
Commission, Teresa Cuaycong Lacson and Apeles H. Lopez, thru counsel, complained
of certain actions of the respondent corporation, the Bacolod-Murcia Milling
Co., Inc. and its President and General Manager, J. Amado Araneta. They claimed
that the above-named respondents had committed various acts in violation of the
Articles of Incorporation of the respondent corporation, the pertinent
provisions of the corporation law, and the rules and regulations promulgated by
the Securities and Exchange Commission. They represented that the conduct of the
said J. Amado Araneta was one series of acts prejudicial to the interests of the
minority stockholders. The complainants were two such stockholders.

Acting on the letter-complaint, petitioner Mariano G. Pineda, in his official
capacity as Securities and Exchange Commissioner, ordered the investigation of
the charges, and, for that purpose, designated the other petitioners, Arcadio E.
Yabyabin and Maximino Pizarro, as investigators. These last two petitioners were
the Chief Legal Counsel and Chief Examiner, respectively, of the Commission.

Pursuant to the above order, petitioners Yabyabin and Pizarro, on July 29,
1958, addressed a subpoena duces tecum to respondent J. Amado Araneta as well as
to the treasurer and secretary of the Bacolod-Murcia. On receiving the subpoena
duces tecum, however, herein respondent corporation and J. Amado Araneta, thru
counsel, filed a “Petition to Reconsider Order and to Set Aside Subpoena Duces
Tecum.” They contended that with the approval of Republic Act No. 1143 on June
17, 1954, “the power given by law to the Securities and Exchange Commission to
conduct investigations has been qualified and made subject to the condition that
such investigations must be conducted in accordance with the rules adopted by
the Commission.” (Sec. 1 [d] Republic Act No. 1143.) And, since the Securities
and Exchange Commission had not till then adopted such rules, it could not
proceed with the investigation.

After due consideration, on August 18, 1958, petitioner Mariano G. Pineda
denied the above petition filed by the respondent.

Subsequently, on August 21, 1958, respondents Bacolod-Murcia and J. Amado
Araneta filed a Motion to Quash and Discontinue Entire Proceedings. This was
docketed as SEC Case No. 951. The basis of this motion was principally the same
as that recited in the petition to reconsider and set aside the subpoena duces
tecum. In other words, the herein respondents reiterated their contention that
the Securities and Exchange Commission could not proceed with the investigation
until after it shall have promulgated the rules required by Republic Act No.
1143. Furthermore, the respondent-movants alleged that the complaint by the
aforesaid minority stockholders “was part of a plot and conspiracy to harass and
oppress the herein respondents at the inspiration or instigation of the
Secretary of Commerce and Industry, the Honorable Pedro C. Hernaez, who has
direct supervision and control over the Securities and Exchange Commission.”
This motion was found to be without merit, and was, for that reason, forthwith
denied by the Commissioner on October 10, 1958.

After having received a copy of the order denying their motion of August 21,
1958, the respondent corporation and J. Amado Araneta filed a special civil
action for prohibition against the herein petitioners Yabyabin and Pizarro, and,
for the first time, enjoined Lacson and Lopez as respondents. It was docketed in
the sala of Judge Gregorio T. Lantin of the Manila Court of First Instance as
Civil Case No. 38456.

Having been served with summons in the above civil case, petitioners Yabyabin
and Pizarro, on November 28, 1959, moved to dismiss the same. They argued that
the writ prayed for would amount to a review, modification or setting aside of
an order of the Securities and Exchange Commission and therefore, beyond the
jurisdiction of the Court of First Instance. According to them, only the Supreme
Court could modify or review an order or decision of the Commission in
accordance with Section 1 of Rule 43, Rules of Court and Section 35 of
Commonwealth Act No. 88, as amended by Republic Act No. 635.

On December 6, 1958, Judge Gregorio T. Lantin issued the following order:
Upon consideration of the motion to dismiss dated November 28, 1958, filed by
respondents Arcadio E. Yabyabin and Maximo B. Pizarro, and the objection
thereto, let resolution of the said motion be deferred until the trial of the
case on the merits.” Soon after the issuance of this order, or, on December 26,
1958, herein petitioners Yabyabin and Pizarro filed an answer to the petition
for prohibition. Thereafter, the order deferring the resolution of the motion to
dismiss was reconsidered. Instead, the motion to dismiss was denied on January
31, 1959.

Disagreeing with the above order of denial, herein petitioners filed a motion
for reconsideration on February 19, 1959. They reaffirmed in that pleading their
position that only the Supreme Court may review orders of the Securities and
Exchange Commission; that when the Manila Court of First Instance did so review,
it went beyond its authority and jurisdiction. This was denied again by the
respondent judge, when on February 28, 1959, he issued an order dismissing the
motion for reconsideration.

This case was elevated to this Honorable Court for review on a petition for
certiorari with prohibition and preliminary injunction. To that end, it devolved
on Us to resolve the question of law first mentioned above. Stated in another
way, the issue here is:

WAS THE CIVIL CASE FOR PROHIBITION FILED BY THE HEREIN RESPONDENT PROPER AND
WITHIN THE JURISDICTION OF THE COURT OF FIRST INSTANCE?

This Tribunal holds the view that under the Rules of Court and the law
applicable to the case at bar, a Court of First Instance has no jurisdiction to
grant injunctive reliefs against the Securities and Exchange Commission. That
power is lodged exclusively with this Court.

Section 1 of Rule 43 of the Rules of Court provides.

“SEC. 1. Petition for review.—Within thirty days from notice of an
order or decision issued by the Public Service Commission or the Securities and
Exchange Commission, any party aggrieved thereby may file, in the Supreme Court,
a written petition for the review of such order or decision.”

Furthermore, Section 35 of Commonwealth Act No. 83, as amended by Republic
Act No. 635, creating and setting forth the powers and functions of the
Securities and Exchange Commission, provides the following:

“SEC. 35. Court review or orders.—(a) Any person aggrieved by an order
issued by the Commission in any proceeding under this Act to which such person
is a party or who may be affected thereby may obtain a review of such order in
the Supreme Court of the Philippines by filing in such Court within thirty days
after the entry of such order a written petition praying that the order of the
Commission be modified or set aside in whole or in part. * * *”

Beyond doubt, therefore, whenever a party is aggrieved by or disagrees with
an order or ruling of the Securities and Exchange Commission, his remedy is to
come to this Court on a petition for review. He is not permitted to seek relief
from courts of general jurisdiction. The two provisions quoted above clearly
pronounce that only this Court possesses the jurisdiction to review or pass upon
the legality or correctness of any order or decision of the Securities and
Exchange Commission, and, as circumstances might warrant, to modify, reverse,
or, set aside the same.

It was urged by the herein respondents that the principal purpose of their
action in the lower court was not to have an order of the Securities and
Exchange Commission reviewed but to have the investigation stopped because of an
alleged lack of jurisdiction to proceed with the same. Therefore, the argument
continued, Section 1 of Rule 43 of the Rules of Court and Section 35 of
Commonwealth Act No. 83, as amended by Republic Act No. 635, could not have
properly applied.

The contention carries no weight. This Court has thoroughly read through the
petition for prohibition filed with the lower court. But, even a cursory reading
of it would have revealed so fully that its main aim was to have, an order of
the Securities and Exchange Commission reviewed the order denying their motion
to quash and discontinue the entire proceeding in the Commission. More than
anything else, Civil Case No. 38456 was meant to have that order of the
Commission ultimately set aside.

But even assuming for the sake of argument that the principal concern of
Bacolod-Murcia in filing the action below was indeed to stop the investigation
so that the jurisdiction of the investigating body to conduct the same might
first be determined, still this Court holds that the action should have been
commenced in this tribunal. When the Rules of Court and the law provided that
orders and decisions of the Securities and Exchange Commission are reviewable
only by this Court, they could not possibly have excluded within their efficacy
the review of incidental orders as the one at bar. Otherwise, the entire
philosophy for providing that only this Court may review on appeal orders of the
Commission would be rendered mute, weak and purposeless. For then, we shall be
sanctioning what can not be done directly to be done indirectly.

Finally, herein respondents contended that since the questioned order of the
Commission was merely interlocutory, they could have come to this Court under
Section 1 of Rule 43 because the said provision refers only to final orders and
decisions. This Court, however, finds neither force nor merit in this argument.
We have held already in the case of San Beda vs. Court of Industrial Relations,
97 Phil., 787; 51 Off. Gaz. (11) 5636, that while the general rule is that
interlocutory orders are not appealable, the same may be so appealed when it is
grounded upon lack of jurisdiction.

The role of the Securities and Exchange Commission in our national economy
cannot be minimized. The legislature has entrusted to it the serious
responsibility of enforcing all laws affecting corporations and other forms of
associations not otherwise vested in some other government offices. Being
charged, therefore, with overseeing the operations of those various corporate
enterprises from which our government derives great revenues and income, it
cannot afford to be impeded or restrained in the performance of its functions by
writs of injunction emanating from tribunals subordinate to this Court. If every
Court of First Instance can enjoin the Commission from pursuing its objectives,
and, in the premises, substitute its judgment for that of the Commission on what
should or should not be done, then, no one will suffer thereby but the economy
of our body politic and, eventually, this country’s citizenry. Certainly, the
legislature could never have intended that.

In view of all the foregoing, the order of the lower court denying the motion
to dismiss filed by the herein petitioners in Civil Case No. 38456 is hereby set
aside and the herein respondents are prohibited and enjoined from proceeding
with the trial and determination on the merits of the same civil case, with
costs.

Bengzon, C. J., Padilla, Labrador, Concepcion, Reyes, J. B. L., Barrera,
Paredes, Dizon, and Makalintal, JJ., concur.