Case Digest (G.R. No. 219603)
Facts:
In Securities and Exchange Commission v. Court of Appeals (consolidated with Astra Securities Corporation v. Omico Corporation, G.R. Nos. 187702 and 189014, decided October 22, 2014 under the 1987 Constitution), Omico Corporation—a publicly listed company—scheduled its annual stockholders’ meeting for November 3, 2008, with a proxy submission deadline of October 23 and a proxy validation date of October 25. Astra Securities Corporation, holding approximately 18% of Omico’s shares, objected to some 38% of the outstanding capital stock being represented by proxies in favor of Tommy Kin Hing Tia (and roughly 2% in favor of Martin Buncio), on the ground that brokers had not secured the required written authorization from their clients in violation of SRC Rule 20(11)(b)(xviii) and that the volume of proxies triggered a solicitation presumption under SRC Rule 20(2)(B)(ii)(b) and Section 20.1 of the Amended Securities Regulation Code. Despite these objections, Omico’s Board of Inspecto...Case Digest (G.R. No. 219603)
Facts:
- Parties and corporate context
- Omico Corporation is a publicly listed company on the Philippine Stock Exchange.
- Astra Securities Corporation owns approximately 18% of Omico’s outstanding capital stock.
- Annual stockholders’ meeting and proxy issues
- Omico scheduled its annual meeting on 3 November 2008, with proxy submission deadline on 23 October and validation on 25 October 2008.
- Astra objected to proxies issued in favor of Tommy Kin Hing Tia (representing about 38% of shares) and proxies in favor of Tia/Martin Buncio (about 2%), alleging:
- Brokers issued proxies without express written authorization of beneficial clients, violating SRC Rule 20(11)(b)(xviii).
- Solicitation presumption under SRC Rule 20(2)(B)(ii)(b) as proxies in favor of Tia exceeded nineteen, breaching Section 20.1 of the SRC.
- Omico’s Board of Inspectors nevertheless declared the challenged proxies valid.
- Administrative and judicial proceedings
- On 27 October 2008, Astra filed with the SEC a complaint to invalidate Tia’s proxies and sought a cease-and-desist order (CDO) to enjoin the 3 November meeting.
- SEC issued the CDO on 30 October 2008; the order was not served on meeting day and the meeting proceeded with 52.3% quorum by proxy/in person, electing directors by motion.
- Astra filed an indirect contempt complaint against Omico before the SEC; Omico filed a petition for certiorari and prohibition with the Court of Appeals (CA) challenging the CDO as grave abuse of discretion.
- CA, in CA-G.R. SP No. 106006 (Decision dated 18 March 2009), declared the CDO null, holding that proxy validation disputes are election contests under the Interim Rules and thus within the exclusive jurisdiction of regular courts, not the SEC.
- CA denied Astra’s motion for reconsideration in a Resolution dated 9 July 2009.
- SEC filed a Rule 65 petition (G.R. No. 187702) and Astra filed a Rule 45 petition (G.R. No. 189014) with the Supreme Court, which were consolidated on 12 October 2009.
Issues:
- Whether the SEC has jurisdiction over controversies arising from the validation of proxies for the election of corporate directors.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)