Case Summary (G.R. No. 110265)
Applicable Law
The case is analyzed under the 1987 Philippine Constitution and relevant statutes, particularly the Securities Regulation Code and Presidential Decree No. 902-A, which governs the jurisdiction of the SEC in corporate matters.
Background of Financial Disputes
Freeman, Inc. secured two loans from Equitable Banking Corporation in 1986 and 1987, evidenced by promissory notes. When Freeman, Inc. defaulted, a collection suit was initiated by Equitable, and private respondents claimed minority interests in Freeman, asserting their rights as shareholders. The trial court denied their intervention, a decision later affirmed by higher courts.
Compromise and Execution Proceedings
The collection case concluded in December 1988 with a settlement. However, Freeman, Inc. and Saw Chiao Lian did not comply with the judgment, leading to a writ of execution in January 1989 that resulted in the seizure and public auction of two parcels of land. Freeman Management acquired these properties, but private respondents subsequently pursued actions against both Freeman, Inc. and Freeman Management to contest the ownership of the seized properties.
Legal Proceedings and Intervention
Private respondents filed a petition before the SEC for dissolution of Freeman and reconveyance of the auctioned properties. Concurrently, they filed a similar complaint in the Regional Trial Court, which was dismissed based on the pending SEC case. This prompted further legal maneuvers, including requests to prevent Freeman Management from consolidating ownership of the properties.
SEC Orders and Petition for Certiorari
The SEC issued a writ of preliminary injunction against Freeman Management in January 1992, a move averse to petitioners' interests. This order was challenged by the petitioners through a certiorari petition, which was subsequently denied by the SEC in March 1993. Petitioners filed another petition with the Supreme Court, asserting that the SEC had exceeded its jurisdiction in issuing the injunction.
Arguments of Petitioners
Petitioners contended that the SEC lacked the authority to issue the injunction as it interfered with a matter already resolved by the Regional Trial Court. They maintained that the auctioned properties were no longer part of Freeman's corporate assets due to the finality of the court's judgment related to the compromise agreement.
Response of Respondents
In their response, private respondents argued that the Supreme Court petition was filed late and raised issues regarding the SEC's jurisdiction as previously ruled by the Court. They asserted that all rights were being litigated within the SEC framework, despite the dismissal of their intervention in the earlier case.
Supreme Court's Ruling
The Supreme Court ruled in
...continue readingCase Syllabus (G.R. No. 110265)
Case Background
- The case involves a petition for certiorari filed under Rule 65 of the Rules of Court by petitioners Freeman, Inc., Freeman Management & Development Corp., and several individuals against the Securities and Exchange Commission (SEC) and other private respondents.
- The petition seeks to annul the SEC's order dated January 7, 1993, which denied petitioners' action to nullify a previous SEC order issued on January 7, 1992.
- The underlying issue arises from a loan agreement between Freeman, Inc. and Equitable Banking Corporation, leading to a collection suit and subsequent auction of properties.
Loan and Collection Proceedings
- In 1986 and 1987, Freeman, Inc. obtained loans from Equitable Banking Corporation, evidenced by two promissory notes totaling P7,700,000.00, signed by Saw Chiao Lian, the President of Freeman, Inc.
- Upon default in payment, Equitable initiated a collection suit and sought a preliminary attachment.
- Private respondents, claiming minority ownership in Freeman, intervened in the case, but their motion was denied by the trial court, an affirmation maintained through higher courts.
Compromise Agreement and Auction
- The collection case concluded with a compromise agreement on December 5, 1988, which Freeman, Inc. and its president failed to comply with, prompting the issuance of a writ of execution.
- On March 31, 1989,