UBS Marketing Corporation v. Court of Appeals
REITERATIONFacts
1. The Antecedents: The underlying dispute involves a family business division between siblings Johnny K.H. Uy and respondents Ban Hua Uy-Flores and Ban Ha Uy-Chua, who were interlocking stockholders and officers of UBS Marketing Corporation and Soon Kee Commercial, Inc. Following disagreements, a settlement was reached where UBS Marketing Corporation was to go to Johnny K.H. Uy, and Soon Kee Commercial, Inc. to the other siblings. Deeds of assignment were executed to formalize this division. Subsequently, petitioners filed a complaint against respondents for the recovery of UBS Marketing Corporation's corporate books, accounting, and turnover of funds and properties, alleging that respondents, who previously managed the corporations, refused to provide these after the segregation. 2. Procedural History: Petitioners filed a complaint with the Securities and Exchange Commission (SEC) for the recovery of corporate records and funds. Respondents moved to dismiss, arguing lack of jurisdiction, which was initially denied by the SEC Hearing Officer. The Court of Appeals (CA) reversed this, ruling the SEC lacked jurisdiction. This Court, however, declared the controversy an intra-corporate dispute within the SEC's jurisdiction. Following this, the SEC Hearing Officer rendered a judgment by default, ordering extensive relief. The SEC en banc modified this, ordering only a full accounting of assets and receivables. Respondents appealed to the CA, which reversed the SEC en banc's order, setting aside the SEC's decision entirely. 3. The Petition: This petition for review on certiorari seeks to reverse the CA's decision that overturned the SEC en banc's order for respondents to render a full accounting. Petitioners argue the CA erred in sustaining respondents' claim of lack of jurisdiction, in applying Section 6, Rule 43 of the 1997 Rules on Civil Procedure (which they contend was misapplied), and in reversing the SEC en banc's decision. Petitioners contend that the SEC en banc correctly granted relief warranted by the petition and proven facts, even if not explicitly prayed for, citing the SEC's Rules on Default and the principle that a judgment need not be limited to the specific prayer if the facts warrant broader relief. They assert that the accounting ordered is within the SEC's jurisdiction and not an action for specific performance.
Issue(s)
Whether the Court of Appeals erred in giving due course to the petition without the required Affidavit of Material Dates. Whether the Court of Appeals erred in sustaining the respondents' claim that the acts complained of constitute an action for specific performance, which must be filed with the Regional Trial Court. Whether the Court of Appeals erred in applying Section 6, Rule 43 of the 1997 Rules on Civil Procedure. Whether the Court of Appeals erred in reversing the decision of the SEC en banc requiring the parties to render a full and complete accounting.
Ruling
The petition is GRANTED. The assailed Court of Appeals Decision, dated 21 August 1997, is REVERSED and SET ASIDE, and the SEC en banc's Order, dated 21 December 1995, and Resolution, dated 24 June 1996, are REINSTATED.
Ratio Decidendi
On the Affidavit of Material Dates and Application of Procedural Rules: The Court found no merit in the procedural issues raised by petitioners regarding the Affidavit of Material Dates and the correct procedural rule applied by the CA. It noted that the issue of the affidavit was not seasonably raised before the CA, making it too late to raise it on appeal. Furthermore, the CA correctly did not implead the SEC as a party, consistent with the governing circular at the time. The Court clarified that the CA's application of Section 6 of Administrative Circular No. 1-95 (now Section 6, Rule 43 of the Rules of Court) was proper in not impleading the lower agency. On Jurisdiction and Specific Performance: The Court held that the CA erred in ruling that the SEC lacked jurisdiction because the action was one for specific performance. The Court reiterated its prior ruling that the controversy was an intra-corporate one falling within the SEC's exclusive jurisdiction under PD 902-A, as amended. The relief of requiring an accounting of assets and properties was deemed a necessary consequence of the allegations and not an independent action for specific performance beyond the SEC's purview. On the Application of Section 6, Rule 43 of the 1997 Rules on Civil Procedure: The Court found no merit in the procedural issues raised by petitioners regarding the Affidavit of Material Dates and the correct procedural rule applied by the CA. It noted that the issue of the affidavit was not seasonably raised before the CA, making it too late to raise it on appeal. Furthermore, the CA correctly did not implead the SEC as a party, consistent with the governing circular at the time. The Court clarified that the CA's application of Section 6 of Administrative Circular No. 1-95 (now Section 6, Rule 43 of the Rules of Court) was proper in not impleading the lower agency. On Relief Granted in Default Cases, Scope of Relief, and Necessity of Accounting: The Court found that the SEC en banc did not commit reversible error in granting the relief of accounting, even if not expressly prayed for, based on the SEC's Rules of Procedure. Section 6 of Rule VII of the SEC's 1993 Revised Rules on Procedure allows the Hearing Officer to grant such relief as the petition and proven facts warrant in cases of default. The Court emphasized that this relief was warranted by the allegations in the petition, which included claims of misappropriation and failure to account for receivables, and was not different in kind from what was prayed for. The CA's reliance on Section 5, Rule 18 of the old Rules of Court, which limits relief in default cases to what is prayed for, was deemed misplaced. The Court noted that the SEC's Revised Rules of Procedure had no similar provision and that even under the Rules of Court, the relief granted was not different in kind, but rather necessarily flowed from the proven facts and the nature of the allegations in the petition. The petition alleged that respondents took charge of accounting and collections, controlled funds, misappropriated funds, and failed to account for receivables, thus necessitating a full accounting. The Court concluded that the prayers in the petition, such as accounting for and turning over funds from receivables, payment of separation pay, delivery of a truck, and accounting for shares in profits, could not be independently considered apart from the overall finances of the family corporations. Therefore, a full and complete accounting of all assets, funds, and receivables was necessarily warranted by the allegations and the nature of the dispute, aligning with the SEC en banc's order.
Main Doctrine
The Securities and Exchange Commission (SEC) has jurisdiction over intra-corporate controversies, and its hearing officers, in cases of default, may grant relief warranted by the allegations and proven facts, even if not expressly prayed for, provided it is not different in kind from what was prayed for.