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MY CASE DIGEST

UPDATED CASES IN SRC
Atty. Gaviola
AY 2016 - 2017
by: glargo

Securities and Exchange Commission v. Universal RightIield Property Holdings, Inc.,
G.R. No. 181381, [July 20, 2015])

Violation of the reportorial requirements under Section 17.1 of the Amended Implementing Rules
and Regulations of the SRC is a ground for suspension OR revocation of registration of securities.

The SEC directed URPHI to show cause why its Registration of Securities and Certi>icate of
Permit to Sell Securities to the Public should not be suspended for failure to submit the said
requirements.

In an Order of Revocation dated December 8, 2004, the SEC revoked URPHI's Registration of
Securities and Permit to Sell Securities to the Public for its failure to submit its reportorial
requirements within the >inal extension period.

Court of Appeals Decision:

• Set aside the SEC Order of Revocation after >inding that URPHI was not afforded due process.

• The CA noted that the hearing to be conducted was only for the purpose of determining
whether URPHI's registration and permit to sell should be suspended and not whether said
registration should be revoked.

ISSUE:

1. WON a separate notices and hearings is necessary for suspension and revocation?

2. WON revocation of registration of securities and permit to sell them to the public is an
exercise of the SEC's quasi-judicial power?

RULING:

1. NO

The Court holds that such notice would be a superIluity since the Order dated July 27, 2004
already states that such proceeding shall ensue if URPHI would still fail to submit the reportorial
requirements after the lapse of the 60-day suspension period.

After all, "due notice" simply means the information that must be given or made to a particular
person or to the public within a legally mandated period of time so that its recipient will have the

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opportunity to respond to a situation or to allegations that affect the individual's or
public's legal rights or duties.

Violation of the reportorial requirements under Section 17.1 of the Amended Implementing
Rules and Regulations of the SRC is a ground for suspension OR revocation of registration of
securities pursuant to Sections 13.1 and 54.1 of the SRC.

Sections 13.1 and 54.1 of the SRC expressly provide that the SEC may suspend or revoke such
registration only after due notice and hearing:

13.1. The Commission may reject a registration statement and refuse registration of the
security thereunder, or revoke the effectivity of a registration statement and the
registration of the security thereunder after due notice and hearing

54.1. If, after due notice and hearing, the Commission Iinds that: (a) There is a
violation of this Code, its rules, or its orders;

(i) Suspension, or revocation of any registration for the offering of securities;

2. NO, it is rather in the exercise of its regulatory power.

In Gamboa v. Finance Secretary, the Court has held that the SEC has both regulatory and
adjudicative(quasi-judicial) functions.

Although Section 13.1 of the SRC requires due notice and hearing before issuing an order of
revocation, the SEC does not perform such quasi-judicial functions and exercise discretion of a
judicial nature in the exercise of such regulatory power.

It neither settles actual controversies involving rights which are legally demandable and
enforceable, nor adjudicates private rights and obligations in cases of adversarial nature.

Rather, when the SEC exercises its incidental power to conduct administrative hearings and
make decisions, it does so in the course of the performance of its regulatory and law
enforcement function.

The revocation of URPHI's registration of securities and permit to sell them to the public cannot
be considered a penalty but a withdrawal of a privilege, which regulatory power the SEC
validly exercised after giving it due notice and opportunity to be heard.

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previously under the Securities and Exchange Commission's jurisdiction. • The Securities and Exchange Commission should have limited its exercise of power to issuing an order imposing a >ine. • The Securities and Exchange Commission acted in excess of its jurisdiction when it ordered UIGDC and SBGCCI to refund Villareal and Filart the amount they paid for SBGCCI shares of stock. the Securities and Exchange Commission's Corporation Finance Department conducted an ocular inspection of the project and found that SBGCCI failed to comply substantially with their commitment to complete the project. Subic Bay Golf and Country Club. SBGCCI would use the proceeds of the sale of securities to pay UIGDC for the development of the golf course. and to suspend the Certi>icate of Registration and Permit to Sell Securities to the Public. Inc. The Securities and Exchange Commission issued an Order for the Registration of 3. Between the Securities and Exchange Commission and the Regional Trial Court has jurisdiction over this case. 8799 or the Securities Regulation Code. In January 2003. The Court of Appeals Decision: • The case involved an intra-corporate controversy. the transfer of jurisdiction to the trial courts does not oust the Securities and Exchange Commission of its jurisdiction to determine if administrative rules and regulations were violated. Inc. The Corporation Finance Department ordered the return of the purchase price of shares pursuant to Rule 14 of the Implementing Rules and Regulations of Republic Act No. No. 2015] Intra-corporate controversies. Complainants Filart and Villareal informed the Securities and Exchange Commission that they had been asking UIGDC for the refund of their payment for their SBGCCI shares alleging that they purchased the shares in 1996 based on the promise of SBGCCI and UIGDC to deliver but were never complied with. (SBGCCI). to amend the prospectus.Securities and Exchange Commission v. ISSUES: 1.000 no par value shares of Subic Bay Golf and Country Club.R. However. are now under the jurisdiction of Regional Trial Courts designated as commercial courts. [March 11. 3 of 26 . • This power has been transferred to the Regional Trial Court. G. 179047 .

NO only limited to regulatory power. Similar to issues such as the existence or inexistence of appraisal rights. even though the Complaint >iled before the Securities and Exchange Commission contains allegations that are intra-corporate in nature. ANALYSIS: On SEC Regulatory and Administrative Power: • However. The provisions in the law or in the rules giving Villareal and Filart the right to be refunded the value of their shares are not equivalent to authority for the Securities and Exchange Commission to issue an order for the refund. The issue of refund is intra-corporate or civil in nature. Such order may not come from the Securities and Exchange Commission. 2. whether the Securities and Exchange Commission has the authority to order the return of purchase price of securities upon >inding that there were fraudulent representations in the prospectus. The Securities and Exchange Commission's regulatory power does not include the authority to order the refund of the purchase price of Villareal's and Filart's shares in the golf club. On Nature of the Controversy Test: • This case also involves corporate rights and obligations.2. pre-emptive rights. it does not necessarily oust the 4 of 26 . It involves a dispute between the corporation. • It involves the determination of a shareholder's rights under the Corporation Code or other intra-corporate rules when the corporation or association fails to ful>ill its obligations. and the right to inspect books and corporate records. Villareal and Filart's right to a refund of the value of their shares was based on SBGCCI and UIGDC's alleged failure to abide by their representations in their prospectus. SBGCCI. RTC has jurisdiction. the issue of refund is an intra-corporate dispute that requires the court to determine and adjudicate the parties' rights based on law or contract. Both tests must concur to be considered intra-corporate dispute: On Relationship Test: • This case is an intra-corporate dispute. RULING: 1. over which the Regional Trial Court has jurisdiction. Villareal and Filart. and its shareholders.

5 of 26 . violations of the law. 2. and misrepresentations. [January 25.com. Inc. G. 164197. The relationship test requires that the dispute be between: 1.. among others. a corporation/partnership/association and its stockholders. Securities and Exchange Commission v. Intra-Corporate Dispute: For a dispute to be "intra-corporate. or associates of the entity. No. a corporation/partnership/association and the state regarding the entity's franchise. 680 PHIL 28-32) (Bar Question 2016) Prosperity. (PCI) sold computer software and hosted websites without providing internet service.R. fraud. Inc. Cullen: [T]he controversy must not only be rooted in the existence of an intra-corporate relationship.Com. or license to operate." In other words. jurisdiction should be determined by considering both the relationship of the parties as well as the nature of the question involved. members. of applications for registration of securities for. The nature of the controversy test requires that the action involves the enforcement of corporate rights and obligations. but must as well pertain to the enforcement of the parties' correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. 3. 2012]. partners. and suspension or revocation. • The Securities and Exchange Commission's regulatory power over securities-related activities is tied to the government's duty to protect the investing public from illegal and fraudulent instruments. Securities and Exchange Commission of its regulatory and administrative jurisdiction to determine and act if there were administrative violations committed. partners. Prosperity. In Medical Plaza Makati Condominium Corporation v. or of>icers. a corporation/partnership/association and the public. • The Securities and Exchange Commission's regulatory power includes approval and rejection. among stockholders. and 4." it must satisfy BOTH the relationship and nature of controversy tests. permit.

A. it is PCI that expects pro>it from the network marketing of its products. Actually. a buyer could acquire from it an internet website of a 15-Mega Byte (MB) capacity. through its Compliance and Enforcement unit. In 2001.00 (subsequently increased to US$294). Apparently. RULING: NO. For each pair of down-lines. following the Howey test. the buyer-sponsor received a US$92. which company stopped operations after the Securities and Exchange Commission (SEC) issued a cease and desist order (CDO) against it. granting PCI's petition and setting aside the SEC- issued CDO. interest in real estate in the Philippines and in the United States. by referring to PCI his own down-line buyers. the SEC. following the Securities Regulations Code. PCI patterned its scheme from that of Golconda Ventures.| I|| ISSUE: whether or not PCI's scheme constitutes an investment contract that requires registration under R. hence. PCI's scheme did not constitute an investment contract that needs registration pursuant to R. CA Decision: On July 31. Evidently. PCI devised a scheme in which. The last requisite in the Howey test is lacking in the marketing scheme that PCI has adopted. disgruntled elements of GVI >iled a complaint with the SEC against PCI.A. this petition. PCI is correct in saying that the US$234 it gets from its clients is merely a consideration for the sale of the websites that it provides. 2003 the CA rendered a decision. alleging that the latter had taken over GVI's operations.To make a pro>it.000. To bene>it from this scheme. After hearing.00. These second tier of buyers could in turn build up their own down-lines. for the price of US$234. The commission. The SEC ruled that PCI's scheme constitutes an Investment contract and. a PCI buyer must enlist and sponsor at least two other buyers as his own down-lines. The CA ruled that. As it later on turned out. interest in real estate. and insurance are incentives to down-line sellers to bring in other customers. a >irst-time buyer could earn commissions. 8799. At the same time. 8799. the same persons who ran the affairs of GVI directed PCI's actual operations. it should have >irst registered such contract or securities with the SEC. PCI appears to be engaged in network marketing. These can hardly be regarded as pro>its from investment of money under the Howey Test. not to the buyer-sponsor. But referrals in a day by the buyer-sponsor should not exceed 16 since the commissions due from excess referrals inure to PCI. Inc. and insurance coverage worth P50. issued a CDO against PCI. a scheme adopted by companies for getting people to buy their products outside the usual retail system where products are 6 of 26 . (GVI).00 commission. but they buy a product of some value to them: an Internet website of a 15-MB capacity.

the following elements. referred to as the Howey test must concur: (1) a contract. reportorial requirements set forth in Section 17. in SMC with an expectation of pro>its arising from the efforts of those who manage and operate that company. World War II veterans and their widows. Under this scheme. Callangan G. When an investor buys these papers or securities. are considered a public company.1 of the SRC because its shares can be owned only by a speciIic group of people.998 shareholders. and (5) proIits arising primarily from the efforts of others. it is clear that a "public company.1 of the SRC.00 and has 395. 670 PHIL 570-576) From these provisions.J. An investment contract is a contract. whose shares are offered only to a speciQic group of people. even companies like the Bank. SMC has to register these commercial papers with the SEC before offering them to investors. together with others. the buyer can become a down-line seller. ISSUE: 7 of 26 . (4) expectation of pro>its. 191995 (Resolution). adopted by most health product distributors. (2) an investment of money. or scheme. or scheme where a person invests his money in a common enterprise and is led to expect proIits primarily from the efforts of others. that it qualiIies as a "public company”. No. transaction.bought from the store's shelf. (3) investment is made in a common enterprise. The network goes down the line where the orders to buy come. that. SEC informed petitioner Bank. Howey Co. W. like San Miguel Corporation (SMC). he invests his money. offer to the public for raising funds that it needs for expansion. provided they meet the requirements enumerated above. transaction. and is not open to the investing public in general. 2011]. hence. is not limited to a company whose shares of stock are publicly listed.R. [August 3. The United States Supreme Court held in Securities and Exchange Commission v.000. having assets exceeding P50. for an investment contract to exist. namely." as contemplated by the SRC. Philippine Veterans Bank v. EXAMPLE: long-term commercial papers that large companies. ANALYSIS: The Securities Regulation Code treats investment contracts as "securities" that have to be registered with the SEC before they can be distributed and sold. The latter earns commissions from purchases made by new buyers whom he refers to the person who sold the product to him.000. orphans and compulsory heirs. Petitioner’s Philippine Veterans Bank: Not "public company" subject to the reportorial requirements under Section 17.

the SEC was Ilooded with complaints from thirty-one (31) individuals against PIPC Corporation.000. agents and brokers for alleged violation of certain provisions of the Securities Regulation Code. the Bank's obligation to provide its stockholders with copies of its annual report is actually for the beneIit of the veterans-stockholders. . whose shares are offered only to a speci>ic group of people. with PIPC-BVI. Sy (Sy). ofIicers.K. [D]ue to the inducements and solicitations of the PIPC corporation's directors. with a promise of higher 8 of 26 . Because the head of PIPC Corporation had gone missing and with it the monies and investment of a signi>icant number of investors. Liew (Liew). the minimum amount of which must be US$40. resulting in greater transparency on the part of the Bank.00) and having two hundred (200) or more holders.00. employees. who supposedly induced private complainants 1. No.R. the former were enticed to invest their hard-earned money. From these provisions. even companies like the Bank. are considered a public company.000. which de>ines a "public company" as "any corporation with a class of equity securities listed on an Exchange OR with assets in excess of Fifty Million Pesos (P50. ANALYSIS: Additionally. SEC v.WON the petitioner is a public company? RULING: YES Rule 3 (1) (m) of the Amended Implementing Rules and Regulations of the SRC. is not limited to a company whose shares of stock are publicly listed. at least two hundred (200) of which are holding at least one hundred (100) shares of a class of its equity securities. Luisa Mercedes P." as contemplated by the SRC. . a foreign corporation registered in the British Virgin Islands. and contrary to the Bank's claim. Santos was charged in the complaints in her capacity as investment consultant of PIPC Corporation. of>icers and employees/agents/brokers. provided they meet the requirements enumerated above. yet another investment scam was exposed with the disappearance of its primary perpetrator. including Section 28 thereof. 2014] In 2007. Ricky Albino P. its directors. as it gives these stockholders access to information on the Bank's >inancial status and operations. G. 31 complaints is that: . Santos. Michael H. 195542. PIPC-BVI incorporated herein as Philippine International Planning Center Corporation (PIPC Corporation).000. [March 19. a self-styled >inancial guru and Chairman of the Board of Directors of Performance Investment Products Corporation (PIPC-BVI). it is clear that a "public company. To do business in the Philippines. Lorenzo (Lorenzo) and 2. to invest their monies in PIPC Corporation.

000 RICKY SY's afIidavit: Sometime in the last quarter of 2006. Soon thereafter.000. He then gave me the number of his sister.00 to ABN-AMRO Hong Kong. Makati.Oudine Santos who worked for PIPC Philippines to discuss the investment further.a. every two (2) months. Santos told regarding me Performance Investment Products Corporation [PIPC]. the SEC. >iled a complaint- af>idavit for violation of Sections 8. Sometime on May 2006. I met her at the business lounge of [PIPC] located at the 15th Floor of Citibank Tower. After exchanging pleasantries. I ultimately agreed to put in FORTY THOUSAND US DOLLARS (US$40. 26 and 28 of the Securities Regulation Code before the Department of Justice. Oudine Santos. TOTAL is $500.00 but Oudine Santos instead said that PIPC Philippines has a new product I might be interested in Enticed by these assurances and promises of large earnings.000. Ms.income potential of an interest of 12 to 18 percentum (%) per annum at relatively low-risk investment program.00) in PMP. I was at BPI Pasong Tamo to accomplish certain routine transactions. The bank manager introduced me to another bank client. Then sometime on May 2007. 9 of 26 .000. Santos enticed me to invest in their Performance Managed Portfolio which she explained was a risk controlled investment program designed for individuals like me who are looking for higher investment returns than bank deposits while still having the advantage of security and liquidity. Ms. pursuant to the instructions Oudine Santos gave me.000.00) in their investment product.000. Among the respondents in the complaint-af>idavit were the principal of>icers of PIPC: LUISA LORENZO's afVidavit: I heard about PIPC Corporation from my friend Derrick Santos during an informal gathering sometime in March 2006.00 to my then subsisting account. I added another US$60. I remitted US$40. thus totaling US$100. and in the course of a brief conversation. through its Compliance and Endorsement Division. He said that the investments in PIPC Corporation generated a return of 18-20% p. I planned to pull out my remaining US$100. Oudine Santos conducted for my personal beneIit a presentation of the characteristics of their investment product called "Performance Managed Portfolio" (PMP). Soon thereafter. A few days later. During the meeting. 14. Ms.000. She told me that they were engaged in foreign currency trading abroad and that they only employ professional and experienced foreign exchange traders.00. I put in FOUR HUNDRED THOUSAND US DOLLARS (US$400.

aAcHCT On 18 April 2008. and items traded in stock and securities/commodities exchanges around the world. As I mentioned above. (2) claiming that she was initially and merely an employee of. was duly registered with the Securities and Exchange Commission and was organized for a legitimate purpose. it having engaged in the solicitation and sale of securities was contrary to the purpose for which it was established which is only to act as a Iinancial research. deposited money directly into PIPC-BVI's account. at the time of its incorporation.On the whole. and (6) on the whole. is indeed registered with the SEC. Of>icial SEC documents would show that while PIPC Corp. an investigation was undertaken by the [Compliance and Enforcement Division of the SEC] on the [account] of PIPC Corp. and certainly not for the purpose of perpetrating a fraud against the public. precious metals such as gold. issued a Resolution signed by a panel of three (3) prosecutors. the company was already in existence for over four years. I joined PIPC Corp. PIPC Corp. thus the only corporation liable to Sy and Lorenzo and the other complainants. general manager or of>icer of PIPC Corp. only in April 2005 and. I had no participation whatsoever in its creation or formation. directly invested their money in PIPC-BVI. Sometime in 2006. apart from being PIPC Corporation's employee. In fact. PIPC Corporation. the DOJ. (5) Santos having dealt only with Sy and the latter. PIPC-BVI as the other party in the investment contracts signed by Sy and Lorenzo. Per its Articles of Incorporation. acted as PIPC Corporation's agent and made representations regarding its investment products and that of the supposed global corporation PIPC-BVI. and oil. PIPC Corp. . as I was not even connected with PIPC Corp. was authorized to engage [in the] dissemination of information on the current Ilow of foreign exchange (forex) as . [was] authorized to act only as a research arm of their foreign clients. speci>ically Sy and Lorenzo. in actuality. director. . Private complainants maintain that Santos. PIPC Corp. the two having. Lorenzo and Sy charge Santos in her capacity as investment consultant of PIPC Corporation who actively engaged in the solicitation and recruitment of investors. I have never been a stockholder. . and subsequently an independent information provider for. (4) her not having received any money from Sy and Lorenzo. silver. (3) PIPC Corporation being a separate entity from PIPC-BVI of which Santos has never been a part of in any capacity. by that time. indicting: 10 of 26 . in fact. To be more speci>ic. Respondent Santos argument: Santos' defense consisted in: (1) denying participation in the conspiracy and fraud perpetrated against the investor- complainants of PIPC Corporation. Further.

(a) Liew and Gonzalez-Tuason for violation of Sections 8 and 26 of the Securities Regulation Code. To do otherwise would open the >loodgates to numerous complaints against innocent individuals who have no hand in the control. Based on the above provision of the law. including herein respondent. xxx xxx xxx xxx all the parties. Securities shall not be sold or offered for sale or distribution within the Philippines.5 thereof provides that "The Commission may audit the Qinancial statements. . assets and other information of a Virm applying for registration of its securities whenever it deems the same necessary to insure full disclosure or to protect the interest of the investors and the public in general. Requirement of Registration of Securities. the DOJ discussed at length the liability of PIPC Corporation and its of>icers. it is only the PIPC Corp.1. employees. Section 8. Cristina Gonzalez-Tuason 2. including Santos. — 8. Sec. and respondents Michael H. . However.] for violating the same when they allegedly sold and/or offered for sale unregistered securities. decision-making and operations of said investment company. shall be made available to each prospective purchaser. of PIPC Corp. Liew and Cristina Gonzalez-Tuason being the President and the General Manager respectively. Santos. complainant SEC >iled the instant case for alleged violation by respondents [therein. complainant SEC is now accusing all respondents [therein. and (b) herein respondent Santos. the undersigned panel of prosecutors has a reason to believe that Section 28 of the SRC has been violated and that the following respondents are probably guilty thereof and should. . Prior to such sale. Clearly. therefore. be held for trial: 1. along with Cristina Gonzalez-Tuason and 12 others for violation of Section 28 of the Securities Regulation Code." It is the Iirm through its authorized of>icers that is required to register its securities with the SEC and not the individual persons allegedly selling and/ or offering for sale said unregistered securities. in such form and with such substance as the Commission may prescribe. who violated Section 8 of the SRC. . information on the securities. Oudine Santos 11 of 26 . to wit: DCATHS Firstly. agents and all those acting on PIPC Corporation's behalf.] of Section 8 of the SRC. without a registration statement duly Iiled with and approved by the Commission. The April 2008 Resolution. 8. xxx xxx xxx 13.

[respondent] OUDINE SANTOS AND HERLEY JESUITAS. as previously adverted to. neither was she mentioned in.As to their contention that they are not of>icers or employees of PIPC Corp. . and PIPC Corporation and/or PIPC-BVI. they cannot raise the defense of good faith for the simple reason that the SRC is a special law where criminal intent is not an essential element. issued a Resolution dated 1 October 2009 which. the Of>ice of the Secretary of the DOJ. and AHaETS xxx In sum. Thereafter. . After the denial of the SEC's motion for reconsideration before the Secretary of the DOJ. it is respectfully recommended that this resolution be APPROVED and that: xxx 3. the Secretary of the DOJ and the appellate court ruled that no evidence was adduced showing Santos' actual participation in the Iinal sale by PIPC Corporation and/or PIPC-BVI of unregistered securities since the very af>idavits of complainants Lorenzo and Sy proved that Santos had never signed. Further. . including herein respondent Santos. An information for violation of Section 28 thereof be >iled against respondents xxx. in particular complainants Sy and Lorenzo. the Supreme Court ruled that one may be an agent of a domestic corporation although he or she is not an ofIicer thereto. on one hand. the DOJ panel based its >inding of probable cause on the collective acts of the majority of the respondents therein. through its then Undersecretary Ricardo R. . Respondent Santos >iled a petition for review before the Of>ice of the Secretary of the DOJ assailing the Resolutions dated 18 April 2008 and 2 September 2008 and claiming that she was a mere clerical employee/information provider who never solicited nor recruited investors. ISSUE: WON Santos' is excluded from the Information for violation of Section 28 of the Securities Regulation Code? 12 of 26 . WHEREFORE.. The Court of Appeals dismissed the SEC's petition for certiorari and af>irmed the 1 October 2009 Resolution of the Secretary of the DOJ: To get to that conclusion. excluded respondent Santos from prosecution for violation of Section 28 of the Securities Regulation Code. the SEC Iiled a petition for certiorari before the Court of Appeals seeking to annul the 1 October 2009 Resolution of the DOJ. Blanca>lor. on the other hand. which consisted in their acting as employees-agent and/or investor-agents of PIPC Corporation and/or PIPC-BVI. any of the investment documents between Lorenzo and Sy. the foregoing considered. for PIPC Corporation or PIPC-BVI.

No matter Santos' strenuous objections. acting as an ostensible agent of the latter on the viability of PIPC Corporation as an investment company.RULING: No. or (b) acting as a salesman. The DOJ's and Court of Appeals' reasoning that Santos did not sign the investment contracts of Sy and Lorenzo is specious. Sec. "Dealer" means [any] person who buys [and] sells securities for his/her own account in the ordinary course of business. The contracts merely document the act performed by Santos. Santos' participation thereon. Solicitation is the act of seeking or asking for business or information. to PIPC Corporation and/or PIPC-BVI. — . a corporation which sold or offered for sale unregistered securities in the Philippines.4. there is no quarrel that Santos was in the employ of PIPC Corporation and/or PIPC-BVI. ANALYSIS: To determine whether the DOJ Secretary's Resolution was tainted with grave abuse of discretion. Santos is not excluded Santos actively recruited and referred possible investors to PIPC Corporation and/or PIPC- BVI and acted as the go-between on behalf of PIPC Corporation and/or PIPC-BVI. even if not shown strictly on paper. we pass upon the elements for violation of Section 28 of the Securities Regulation Code: (a) engaging in the business of buying or selling securities in the Philippines as a broker or dealer. it is not a commitment to an agreement. was prima facie established. xxx xxx xxx 3. . Tying it all in. unless registered as such with the SEC. At each point of Sy's and Lorenzo's investment. 3. . it is apparent that she connected the probable investors. DeVinition of Terms. . "Broker" is a person engaged in the business of buying and selling securities for the account of others. Santos procured the sale of these unregistered securities to the two (2) complainants by providing information on the investment products being offered for sale by PIPC Corporation and/or PIPC-BVI and convincing them to invest therein. While Santos was not a signatory to the contracts on Sy's or Lorenzo's investments.3. 13 of 26 . Sy and Lorenzo. 3. or (c) acting as an associated person of any broker or dealer.

speci>ically Rule 3. instrument. by the dealer. issuer or broker to buy and sell securities Under the SRC's Amended Implementing Rules and Regulations. issuer or broker to buy and sell securities. accept performance of. or terminate contractual obligations between principal and third persons. and ultimately. Salesmen and Associated Persons. by a dealer. contract. the Secretary of the DOJ. No registered broker or dealer shall employ any salesman or any associated person. whose function is to bring about. No person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer unless registered as such with the Commission. or an agent or a person whose functions are solely clerical or ministerial. — 28. Dealers. 1 subpar. AHCaED Jurisprudence de>ines an "agent" as a "business representative." . 3. modify. employed as such [or] as an agent.2. who is not registered as such with the Commission. "Associated person of a broker or dealer" is an employee thereof whom. [28]. It includes among others. 28. xxx xxx xxx 3. whether written or electronic in character.5. affect. On the other hand. even if the promoter receives nothing more than a broker's commission. Generally. certiIicates of deposit for a future subscription. the investigating prosecutor. . Section 28 of the Securities Regulation Code (SRC) reads: SEC. investment contracts. the Implementing Rules of the SRC simply provides that an agent or a "salesman" is a person employed as such or as an agent. par. participation or interest in a corporation or in a commercial enterprise or proIit making venture and evidenced by a certiIicate. "Salesman" is a natural person. directly exercises control of supervisory authority. and no issuer shall employ any salesman. an investment contract has been de>ined as a contract. transaction or scheme (collectively "contract"). but does not include a salesman. whereby a person invests his money in a common enterprise and is led to expect proIits primarily from the efforts of others.13.1. Registration of Brokers. at the preliminary investigation proper. It is likewise provided in the said provision that an investment contract is presumed to exist whenever a person seeks to use the money or property of others on the promise of proIits and a common enterprise is deemed created when two (2) or more investors "pool" their resources creating a common enterprise. G. Securities have been de>ined as shares. certiIicates of interest or participation in a proIit sharing agreement. is afforded wide latitude of discretion in the exercise of its power to 14 of 26 . .

570 PHIL 161-173 Petitioner Power Homes Unlimited Corp. leasing.R. when there is a prejudicial question which is sub judice. ordinance or regulation. The determination of probable cause is an executive function where the prosecutor determines merely that a crime has been committed and that the accused has committed the same. 2008]. However. 6. we have. [February 26. it cannot be exercised arbitrarily or capriciously. Its primary purpose is: To engage in the transaction of promoting. acquiring. when double jeopardy is clearly apparent. and in the purchase. DIEcHa 10. 164182. 2000. obtaining options on. Power Homes Unlimited Corp. 8. Where the >indings of the investigating prosecutor or the Secretary of the DOJ as to the existence of probable cause are equivalent to a gross misapprehension of facts. where the charges are manifestly false and motivated by the lust for vengeance. adhered to some exceptions to the general rule: 1. SEC G.determine probable cause to warrant criminal prosecution. the authority of the prosecutor and the DOJ is not absolute. where it is a case of persecution rather than prosecution. where the court has no jurisdiction over the offense. While it is our policy not to interfere in the conduct of preliminary investigations. The rules do not require that a prosecutor has moral certainty of the guilt of a person simply for preliminary investigation purposes. when necessary to afford adequate protection to the constitutional rights of the accused. respondent Noel Manero requested SEC to investigate petitioner's business alleging that they are selling properties that were inexistent and without any broker's license. sale and/or exchange of said subdivision and properties through network marketing. is a domestic corporation duly registered with public respondent SEC on October 13. and improvement of real estate properties for subdivision and allied purposes. development. where the prosecution is under an invalid law. certiorari will lie to correct these errors. 15 of 26 . when there is clearly no prima facie case against the accused and a motion to quash on that ground has been denied. ETDAaC 2. 2000. On October 27. when the acts of the ofQicer are without or in excess of authority. 3. managing. 5. No. 7. on more than one occasion. v. 9. 4. when necessary for the orderly administration of justice or to avoid oppression or multiplicity of actions.

On November 21. ISSUES: 1. whether public respondent SEC followed due process in the issuance of the assailed CDO. 2001. On January 26. 3. 2001. but failed to register them in violation of Sec.) No.A. after Iinding petitioner to be engaged in the sale or offer for sale or distribution of investment contracts. Fil-Estate Network and Pioneer 29 Realty Corporation.1 of the same Act. Jr. public respondent SEC held a conference on December 13. The attendees were requested to submit copies of petitioner's marketing scheme and list of its members with addresses. 2001. sample of member mail box. the petition for certiorari and prohibition >iled by the other petitioner Powerhomes Unlimited Corporation is hereby DENIED for lack of merit and the questioned Cease and Desist Order issued by public respondent against it is accordingly AFFIRMED IN TOTO. Munsayac. webpages of two (2) members. which are considered securities under Sec. public respondent SEC visited the business premises of petitioner wherein it gathered documents such as certiIicates of accreditation to several real estate companies. which public respondent SEC denied for lack of merit on February 22. and 16 of 26 . 2003. . and lists of Business Center Owners who are quali>ied to acquire real estate properties and materials on computer tutorials. . 2000. 8799 (The Securities Regulation Code). petitioner >iled in the Court of Appeals a Motion for the Issuance of a Writ of Preliminary Injunction which CA granted. The disposition pertinent to petitioner reads: WHEREFORE.1 (b) of Republic Act (R. one Romulo E. On the same day. 8. Aggrieved. petitioner went to the Court of Appeals imputing grave abuse of discretion amounting to lack or excess of jurisdiction on public respondent SEC for issuing the order." On the bases of the letters of respondent Manero and Munsayac. inquired from public respondent SEC whether petitioner's business involves "legitimate network marketing. Petitioner Power Homes Argument: Claim that the payment of US$234 is for the seminars on leverage marketing and not for any product. . . On July 31. On June 19. 2001. list of members with web sites. public respondent SEC issued a CDO. petitioner moved for the lifting of the CDO. On February 5. petitioner submitted to public respondent SEC copies of its marketing course module and letters of accreditation/authority or con>irmation from Crown Asia. the Court of Appeals issued its Consolidated Decision. 2000 that was attended by petitioner's incorporators. The following day or on December 14. 2000.

due process is observed The records reveal that public respondent SEC properly examined petitioner's business operations when it (1) called into conference three of petitioner's incorporators. 2. may issue a cease and desist order without the necessity of a prior hearing if in its judgment the act or practice.1. 64 of R. the facts of SEC v. and (4) visited petitioner's business premises and gathered information thereat. In Turner. The petitioner was engaged in the sale or distribution of an investment contract. Yes. it constitute investment contract The CDO was proper even without a >inding of fraud. will operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public. the US Court of Appeals of the 9th Circuit held that self-improvement contracts which primarily offered the buyer the opportunity of earning commissions on the sale of contracts to others were "investment contracts" and thus were "securities" within the meaning of the federal securities laws. 2. Cease and Desist Order. a formal trial or hearing is not necessary to comply with the requirements of due process. unless restrained. All these were done before the CDO was issued by the public respondent SEC. 64. (2) requested information from the incorporators regarding the nature of petitioner's business operations. (3) asked them to submit documents pertinent thereto. it must be registered with public respondent SEC. the SEC brought a suit to enjoin the violation of federal securities laws by a company offering to sell to the public contracts characterized as self-improvement courses. Turner are similar to the case at bar.A. otherwise the SEC cannot protect the investing public from fraudulent securities. RULING: 1. Yes.A. motu proprio or upon veriIied complaint by any aggrieved party. — 64. No. No. Trite to state. Interestingly. The strict regulation of securities is founded on the premise that the capital markets depend on the investing public's level of con>idence in the system. 8799 provides: Sec. On appeal from a grant of preliminary injunction. Its essence is simply the opportunity to explain one's position. Sec. The Commission. 8799. 17 of 26 . whether petitioner's business constitutes an investment contract which should be registered with public respondent SEC before its sale or offer for sale or distribution to the public. Public respondent SEC abundantly allowed petitioner to prove its side. As an investment contract that is security under R. after proper investigation or veriIication.

for which he will receive a part of what they pay. This entitles him to recruit two (2) investors who pay US$234 each and out of which amount he receives US$92. We reject petitioner's claim that the payment of US$234 is for the seminars on leverage marketing and not for any product. the purchaser is really buying the possibility of deriving money from the sale of the plans by Dare to individuals whom the purchaser has brought to Dare. 8799 appears to follow this Ilexible concept for it deIines an investment contract as a contract.A. entitles the principal investor to US$184 and the pyramid goes on. he turns his efforts toward bringing others into the organization." The business scheme of petitioner in the case at bar is essentially similar. such as seminars. An investor enrolls in petitioner's program by paying US$234. to be a security subject to regulation by the SEC. An investment contract is de>ined in the Amended Implementing Rules and Regulations of R. Clearly. 8799." Section 8. A minimum recruitment of four (4) investors by these two (2) recruits.1 of R. >ilms. Once an individual has purchased a Plan. (3) with expectation of pro>its. ANALYSIS: Our R.A. to put it mildly. transaction or scheme (collectively 'contract') whereby a person invests his money in a common enterprise and is led to expect pro>its primarily from the efforts of others. No. No. His task is to bring prospective purchasers to "Adventure Meetings. an investment contract in our jurisdiction must be proved to be: (1) an investment of money. transaction or scheme (collectively "contract") whereby a person invests his money in a common enterprise and is led to expect proIits not solely but primarily from the efforts of others. Their value for any other purpose is.A. (2) in a common enterprise. 8799 as a "contract. the trainings or seminars are merely designed to enhance petitioner's business of teaching its investors the know-how of its multi-level marketing business.The appellate court held: It is apparent from the record that what is sold is not of the usual "business motivation" type of courses. viz: 18 of 26 . No. minimal. and records. who then recruit at least two (2) each. Rather. (4) primarily from efforts of others. Thus. are aimed at interesting others in the Plans. The promotional aspects of the plan.

It ruled that the use of the catch-all term "investment contract" indicated a congressional intent to cover a wide range of investment transactions. Securities shall not be sold or offered for sale or distribution within the Philippines. Howey Co. contract. The Terms and Conditions printed at the back of the application form indicate that the BCO shall mean an independent representative of Power Homes. (changed from “solely” to “primarily” in later case) Although the proponents must establish all four elements. It also described the conduct of petitioner's business as follows: The scheme of the [petitioner] corporation requires an investor to become a Business Center Owner (BCO) who must >ill-up and sign its application form. — 8. Paragraph 5 of the same indicates that there exists no employer/employee relationship between the BCO and the Power Homes Unlimited. one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of pro>its. W. in such form and with such substance as the Commission may prescribe." Needless to state. 19 of 26 . Inc. et al. the US Supreme Court stressed that the Howey Test "embodies a Ilexible rather than a static principle. It held that a literal reading of the requirement "solely" would lead to unrealistic results. Prior to such sale. or scheme whereby a person (1) makes an investment of money. without a registration statement duly Iiled with and approved by the Commission. (2) in a common enterprise. After Howey came the 1973 US case of SEC v. information on the securities. Section 8." Known as the Howey Test. (3) with the expectation of pro>its. It established a test to determine whether a transaction falls within the scope of an "investment contract. the 9th Circuit of the US Court of Appeals ruled that the element that proIits must come "solely" from the efforts of others should not be given a strict interpretation. recognizing that the term "investment contract" was not deIined by the Act or illumined by any legislative report. Turner Enterprises. who is enrolled in the company's referral program and who will ultimately purchase real property from any accredited real estate developers and as such he is entitled to a referral bonus/commission.J. Our de>inition of an investment contract traces its roots from the 1946 United States (US) case of SEC v. shall be made available to each prospective purchaser. regardless of whether its issuer was engaged in fraudulent practices. Requirement of Registration of Securities. it requires a transaction. It reasoned out that its Ilexible reading is in accord with the statutory policy of affording broad protection to the public. (4) to be derived solely from the efforts of others. Corp.1. In this case. Glenn W. any investment contract covered by the Howey Test must be registered under the Securities Act. The US Supreme Court.

pages Union Cement Corporation (UCC) Publicly-listed Bacnotan Consolidated Atlas Cement Corp (ACC) Petitioner Cemco Industries(BCI) 29.doc to . in a subsequent letter dated 27 July 2004. BCI's stocks in UCHC equivalent to 21.31%+29. Inc. No. in a letter to the SEC dated 15 July 2004.69% 9% On. National Life Insurance Co. 20 of 26 . 2004. His enrollment entitles him to recruit two investors who should pay US$234 each and out of which amount he shall receive US$92. v. [August 7.31% and ACC's stocks in UCHC equivalent to 29.20 and so on… Cemco Holdings. Director Callangan con>irmed that the SEC en banc had resolved that the Cemco transaction was not covered by the tender offer rule. July 5. inquired as to whether the Tender Offer Rule under Rule 19 of the Implementing Rules of the Securities Regulation Code is not applicable to the purchase by petitioner of the majority of shares of UCC.R. The BCO is required to pay US$234 as his enrollment fee.69+9+] ership of CEMCO in UCC = 60%(UCHC) of 60%(Cemco) = 36% rship of CEMCO in UCC 17% The PSE.. of the Philippines. 171815. the BCO will receive a total amount of US$147. 556 PHIL 198-217 Distorted Illustration Ddue to converting this Iile from .69% sold to CEMCO resulting in… Union Cement Corporation (UCC) Publicly-listed Cemco 60% [21. G. Inc. 2007]. In case the two referrals/enrollees would recruit a minimum of four (4) persons each recruiting two (2) persons who become his/her own down lines. Thereafter.

confer on itself that jurisdiction. as buyer. a Share Purchase Agreement was executed by ACC and BCI. Having been vested with purely administrative authority. by mere administrative regulation. and the like. Rule 19 of the Securities Regulation Code. a publicly-listed company. On 5 August 2004. Iiled a complaint with the SEC asking it to reverse its 27 July 2004 Resolution and to declare the purchase agreement of Cemco void and praying that the mandatory tender offer rule be applied to its UCC shares. sent a letter to Cemco demanding the latter to comply with the rule on mandatory tender offer. It ruled that the SEC has jurisdiction to render the questioned decision and. Inc. held that the tender offer requirement under the Securities Regulation Code and its Implementing Rules applies to Cemco's purchase of UCHC stocks. Whether or not the rule on mandatory tender offer applies to the indirect acquisition of shares in a listed company. the suspension or revocation of registrations with the SEC. On 19 August 2004. Cemco was barred by estoppel from questioning the SEC's jurisdiction. AHTICD • in the absence of any speci>ic grant of jurisdiction by Congress. they were uniform in arguing that the tender offer rule applied only to a direct acquisition of the shares of the listed company xxx SEC Decision: In a Decision dated 14 February 2005. the SEC ruled in favor of the respondent by reversing and setting aside its 27 July 2004 Resolution and directed petitioner Cemco to make a tender offer for UCC shares to respondent and other holders of UCC shares similar to the class held by UCHC in accordance with Section 9 (E).. Since the SEC's order commanding it to make a tender offer is an afIirmative relief Iixing the respective rights and obligations of parties. such order is void. Petitioner Cemco argument: • The SEC's authority is purely administrative. Inc. respondent National Life Insurance Company of the Philippines. 21 of 26 . in this case. in any event. likewise. a minority stockholder of UCC. the SEC can only impose administrative sanctions such as the imposition of administrative >ines. the indirect acquisition by Cemco of 36% of UCC. feeling aggrieved by the transaction.On 28 July 2004. and Cemco. as sellers. ISSUES: 1. 2. It. Whether or not the SEC has jurisdiction over respondent's complaint and to require Cemco to make a tender offer for respondent's UCC shares. through its purchase of the shares in UCHC. a non-listed company. Petitioner Cemco Comment: In their comments. respondent National Life Insurance Company of the Philippines. CA Decision: The Court of Appeals rendered a decision af>irming the ruling of the SEC. the SEC cannot.

it has the incidental power to conduct hearings and render decisions Iixing the rights and obligations of the parties. SEC the general adjudicative power which is implied from the express powers of the Commission or which is incidental to. It must be pointed out that petitioner had participated in all the proceedings before the SEC and had prayed for afIirmative relief. upon complaint. According to CA: In interpreting the powers and functions of the SEC that the law has made the SEC primarily a regulatory body with the incidental power to conduct administrative hearings and make decisions. Section 5. Whether or not the questioned ruling of the SEC can be applied retroactively to Cemco's transaction which was consummated under the authority of the SEC's prior resolution. petitioner defended the jurisdiction of the SEC in its Comment dated 15 September 2004. or which are necessary or incidental to the carrying out of. SEC has jurisdiction The SEC's power and authority to regulate. RULINGS: 1. Violation If there shall be violation of this Rule by pursuing a purchase of equity shares of a public company at threshold amounts without the required tender offer. to wit: 13. to deprive the SEC of this power would render the agency inutile. the following powers and functions: xxx xxx xxx (n) Exercise such other powers as may be provided by law as well as those which may be implied from. This shall be without prejudice to the imposition of other sanctions under the Code. the performance of the administrative duties entrusted to it. Yes. xxx Moreover. investigate or supervise the activities of persons to ensure compliance with the Securities Regulation Code. may nullify the said acquisition and direct the holding of a tender offer. among others. the express powers granted the Commission to achieve the objectives and purposes of these laws. viz: [T]he Commission shall have. more speci>ically the provision on mandatory tender offer under Section 19 the SEC was acting pursuant to Rule 19 (13) of the Amended Implementing Rules and Regulations of the Securities Regulation Code. In fact. As a regulatory agency. 3. because it would become powerless to regulate and implement the law. the Commission. >iled with the SEC wherein it asserted: 22 of 26 . In fact. petitioner is barred from questioning the jurisdiction of the SEC.1 (n). or reasonably necessary to carry out.

2. 19. to construe ownership acquisition to mean both direct and indirect. however. It is further provided therein that mandatory tender offer is still applicable even if the acquisition is less than 35% when the purchase would result in ownership of over 51% of the total outstanding equity securities of the public company. It was only when the case was before the Court of Appeals and after the SEC rendered an unfavorable judgment against it that petitioner challenged the SEC's competence.Petitioner did not question the jurisdiction of the SEC when it rendered an opinion favorable to it. a statement containing such of the information required in Section 17 of this Code as the Commission may prescribe. mandatory tender offer applies.000. Under Section 19 of Republic Act No.1. either through the direct purchase of its stocks or through an indirect means. Yes. direct or indirect acquisition applies The SEC and the Court of Appeals accurately pointed out that the coverage of the mandatory tender offer rule covers not only direct acquisition but also indirect acquisition or "any type of acquisition" The SEC and the Court of Appeals ruled that the indirect acquisition by petitioner of 36% of UCC shares through the acquisition of the non-listed UCHC shares is covered by the mandatory tender offer rule. Whatever may be the method by which control of a public company is obtained. xxx As appropriately held by the Court of Appeals: Xxx We are constrained. where the SEC opined that the Cemco transaction was not covered by the mandatory tender offer rule.000. What is decisive is the determination of the power of control. Under existing SEC Rules. such as the 27 July 2004 Resolution. or materials making a tender offer or requesting or inviting letters of such a security. (a) Any person or group of persons acting in concert who intends to acquire at least Iifteen percent (15%) of any class of any equity security of a listed corporation or of any class of any equity security of a corporation with assets of at least Fifty million pesos (P50. Such person or group of persons shall publish all requests or invitations for tender.00) and having two hundred (200) or more stockholders with at least one hundred (100) shares each or who intends to acquire at least thirty percent (30%) of such equity over a period of twelve (12) months shall make a tender offer to stockholders by >iling with the Commission a declaration to that effect. and furnish the issuer. The legislative intent behind the tender offer rule makes clear that the type of activity intended to be regulated is the 23 of 26 . it is stated: Tender Offers. the 15% and 30% threshold acquisition of shares under the provision was increased to thirty-Iive percent (35%). The legislative intent of Section 19 of the Code is to regulate activities relating to acquisition of control of the listed company and for the purpose of protecting the minority stockholders of a listed corporation. 8799.

The bottomline of the law is to give the shareholder of the listed company the opportunity to decide whether or not to sell in connection with a transfer of control. the same cannot be utilized to determine the rights of the parties. There was no public hearing where interested parties could have been heard. if there is no recognition of what had transpired prior to such adjudication. 3. National Labor Relations Commission. this is subject to the quali>ication that when a doctrine of this Court is overruled and a different view is adopted. It is apparent that private respondent misconceived the import of the ruling. Private respondent's view of the principle of prospective application of new judicial doctrines would turn the judicial function into a mere academic exercise with the result that the doctrine laid down would be no more than a dictum and would deprive the holding in the case of any force. Hence. Said letter was merely advisory. and more so when there is a reversal thereof. Since the letter dated 27 July 2004 runs counter to the Securities Regulation Code. What is to be applied in the present case is the subsequent ruling of the SEC dated 14 February 2005 abandoning the opinion embodied in the letter dated 27 July 2004. it can be applied retroactively The action of the SEC on the PSE request for opinion on the Cemco transaction cannot be construed as passing merits or giving approval to the questioned transaction. To hold otherwise would be to deprive the law of its quality of fairness and justice then. Jurisprudence has it that an advisory opinion of an agency may be stricken down if it deviates from the provision of the statute. As aptly pointed out by the respondent. it was not issued upon a deIinite and concrete controversy affecting the legal relations of parties thereby making it a judgment conclusive on all the parties. irrespective of the means. Control may [be] effected through a direct and indirect acquisition of stock. the new doctrine should be applied prospectively and should not apply to parties who relied on the old doctrine and acted in good faith. The decision in Columbia Pictures does not mean that if a new rule is laid down in a case. and when this takes place. Assuming arguendo that the letter dated 27 July 2004 constitutes a ruling.acquisition of control of the listed company through the purchase of shares. In Serrano v. Said postulation was ignored by the Court when it ruled: While a judicial interpretation becomes a part of the law as of the date that law was originally passed. it should not be applied in that case but that said rule should apply prospectively to cases arising afterwards. Yes. a tender offer must occur. xxx ANALYSIS: 24 of 26 . the same may be disregarded as what the SEC has done in its decision dated 14 February 2005. the letter dated 27 July 2004 of the SEC was nothing but an approval of the draft letter prepared by Director Callanga.

Also. and rescind such rules and regulations and orders necessary or appropriate. unless such construction is clearly shown to be in sharp contrast with the governing law or statute. . To effect the provisions and purposes of this Code. after expressing the policy. This is so because statutes are usually couched in general terms. As enunciated in Victorias Milling Co. Section 72 of the Securities Regulation Code reads: 72. subject to the limitation that the same are consistent with the declared policy of the Code. regulations and orders.. partake of the nature of a statute.The SEC has the authority to promulgate rules and regulations. . purposes. . of fraudulent and manipulative devises. remedies and sanctions intended by the legislature. if not total elimination. . on 17 July 2000. Social Security Commission: 9 Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law. xxxSAHIaD The power conferred upon the SEC to promulgate rules and regulations is a legislative recognition of the complexity and the constantly-Iluctuating nature of the market and the impossibility of foreseeing all the possible contingencies that cannot be addressed in advance.1. Bicameral Conference Committee on the Securities Act of 2000. Thus. and compliance therewith may be enforced by a penal sanction provided in the law. Inc. nevertheless. it has been said that rules and regulations are the product of a delegated power to create new or additional legal provisions that have the effect of law. Subsection 5.1 (g) of the law provides: Prepare. amend. and issue opinions and provide guidance on and supervise compliance with such rules. approve. . Among them is the protection of the investors and the minimization. the party raising such question may be estopped if he has actively taken part in the very proceedings which he questions and he only objects to the court's jurisdiction because the judgment or the order subsequently rendered is adverse to him. . the Commission may issue. In this sense. in Ceroferr Realty Corporation v. The details and the manner of carrying out the law are often times left to the administrative agency entrusted with its enforcement. amend or repeal rules. regulations and orders. The rule in this jurisdiction is that the construction given to a statute by an administrative agency charged with the interpretation and application of that statute is entitled to great weight by the courts. 25 of 26 . . objectives. v. Court of Appeals: While the lack of jurisdiction of a court may be raised at any stage of an action.

.00 and with 200 or more stockholders. . a tender offer is an offer by the acquiring person to stockholders of a public company for them to tender their shares therein on the terms speciIied in the offer. It gives the minority shareholders the chance to exit the company under reasonable terms. ayan na.000.000. Stated differently. Any type of acquisition just as long as it will result in 30. A public company is de>ined as a corporation which is listed on an exchange. reaches 30. at least 200 of them holding not less than 100 shares of such company. Tender offer is in place to protect minority shareholders against any scheme that dilutes the share value of their investments. general tender. Any type of acquisition just as long as it will result in 30 . ayan na. pro-rata. (p. 50) . As long as it reaches 30. Tender offer is a publicly announced intention by a person acting alone or in concert with other persons to acquire equity securities of a public company. . giving them the opportunity to sell their shares at the same price as those of the majority shareholders. or a corporation with assets exceeding P50. 26 of 26 . .