Case Digest (G.R. No. 166414) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In 1998, Sinophil Corporation, a publicly-listed Philippine entity, entered into a Share Swap Agreement with Metroplex Berhad and Paxell Investment Limited, foreign corporations organized under Malaysian and Western Samoan laws respectively, whereby Metroplex and Paxell transferred 40% of their shares in Legend International Resorts Limited in exchange for a combined 3.87 billion newly issued Sinophil shares. Metroplex pledged two billion of these shares to secure Legend’s bank loans. In August 2001, the parties executed an Unwinding Agreement rescinding the swap, but Metroplex and Paxell could not return 1.87 billion shares, while two billion remained pledged. On February 18, 2002, June 3, 2005, and June 21, 2007, Sinophil’s shareholders approved reductions of its authorized capital stock. The Company Registration and Monitoring Department (CRMD) and the Corporation Finance Department (CFD) of the Securities and Exchange Commission (SEC) approved amendments reducing 1.87 billio Case Digest (G.R. No. 166414) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties
- Petitioners
- Metroplex Berhad – Malaysian corporation in liquidation
- Paxell Investment Limited – Western Somoan corporation
- Respondents
- Sinophil Corporation – Philippine publicly-listed corporation
- Belle Corporation – Philippine publicly-listed corporation
- SEC officers – Heads and division chiefs of CRMD, CFD, CPRD, FAAD
- Share Swap and Unwinding Agreements
- 1998 Swap Agreement
- Metroplex and Paxell transferred 40% of Legend International shares
- They received 3.87 billion shares of Sinophil in exchange
- Metroplex pledged 2 billion Sinophil shares to secure Legend’s loans
- 2001 Unwinding Agreement
- Parties rescinded the Swap Agreement
- Petitioners failed to return 1.87 billion Sinophil shares; 2 billion remained pledged
- Capital Stock Reductions and SEC Approvals
- First Reduction
- February 18, 2002 – Shareholders approved decrease
- March 28, 2006 – CRMD and CFD approved 1.87 billion-share reduction
- March 29, 2006 – Disclosure to Philippine Stock Exchange (PSE)
- Second Reduction
- June 21, 2007 – Shareholders approved further 1 billion-share reduction
- June 24, 2008 – CRMD and CFD approved amendment
- June 30, 2008 – Disclosure to PSE
- Procedural History
- SEC Proceedings
- July 21, 2008 – Petition for Review Ad Cautelam filed by Yaw, Metroplex, Paxell
- February 26, 2009 – SEC denied petition; held reduction complied with Corp. Code Sec. 38
- Court of Appeals
- January 29, 2013 – CA affirmed SEC in toto
- July 17, 2013 – CA denied motion for reconsideration
- Supreme Court
- June 28, 2021 – Resolution of Petition for Review on Certiorari
Issues:
- Whether the Court of Appeals erred in affirming the SEC’s order approving the selective reduction of Sinophil’s issued capital.
- Whether the SEC had jurisdiction to review the Operating Departments’ approval of the capital stock amendments.
- Whether Sinophil complied with all legal and procedural requirements under Section 38 of the Corporation Code and other relevant doctrines.
- Whether petitioners were entitled to injunctive relief (TRO and preliminary injunction) against respondents.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)