Philippine Stock Exchange v. Manila Banking Corporation
REITERATIONFacts
The Antecedents: The Manila Banking Corporation (TMBC) acquired Manila Stock Exchange (MSE) Seat No. 97 through an execution sale. TMBC requested the MSE to register its ownership, but MSE initially refused, citing by-laws that allowed only individuals or corporations primarily engaged in the stock and bonds business as members. TMBC eventually received an Acknowledgment Letter from MSE recognizing its legal or naked ownership of the seat. Subsequently, the Philippine Stock Exchange, Inc. (PSEI) was incorporated, unifying MSE and Makati Stock Exchange (MKSE). PSEI issued a certificate of membership to Roberto K. Recio (Recio) as Member No. 29. TMBC, believing PSE Seat No. 29 was derived from MSE Seat No. 97, sought PSEI's recognition of its proprietary rights over PSE Seat No. 29, but PSEI repeatedly refused. Procedural History: TMBC filed a Petition for Mandamus with Claim for Damages before the Securities and Exchange Commission (SEC) Securities Investigation and Clearing Department (SICD) Hearing Panel, seeking acknowledgment of its proprietary interest over PSE Seat No. 29. Petitioners (Philippine Stock Exchange, Inc. and its Board of Governors) filed a motion to dismiss, arguing lack of SEC jurisdiction, failure to state a cause of action, and impropriety of mandamus. The SICD Hearing Panel denied the motion to dismiss. Petitioners elevated the case to the SEC en banc via certiorari, which also denied their petition. Petitioners then filed a petition for review with the Court of Appeals (CA), which dismissed their petition for lack of merit. The CA's resolution denying their motion for reconsideration led to the present petition for review on certiorari before the Supreme Court. The Petition: Petitioners seek the reversal of the CA's decision, praying for the nullification of the CA decision and the dismissal of TMBC's mandamus petition before the SEC, reiterating their arguments regarding jurisdiction, cause of action, and the propriety of mandamus.
Issue(s)
Whether the SEC had jurisdiction over the petition for mandamus. Whether the petition filed by TMBC stated a sufficient cause of action against the petitioners. Whether the remedy of mandamus was proper in compelling the petitioners to acknowledge TMBC's proprietary interest over PSE Seat No. 29.
Ruling
The petition is DENIED. The assailed decision and resolution of the Court of Appeals are AFFIRMED.
Ratio Decidendi
On the issue of SEC jurisdiction and the denial of the motion to dismiss: The Court held that the denial of a motion to dismiss is an interlocutory order and generally cannot be the subject of a special civil action for certiorari, unless the denial was tainted with grave abuse of discretion amounting to lack or excess of jurisdiction. The Court found that the SEC en banc correctly sustained the SICD Hearing Panel's denial of the motion to dismiss. The SEC's rules provide that if the court entertains doubts as to the truth of the facts averred, it must not dismiss the complaint but require an answer and proceed to hear the case on the merits. The allegations in TMBC's petition sufficiently stated a cause of action, and the factual issues, including allegations of fraud and bad faith, were best ventilated during a trial on the merits. The SEC's jurisdiction was conferred by law, P.D. 902-A, and was determined by the allegations in the petition, which sufficiently made out a case of fraud, misrepresentation, and bad faith against the petitioners. On the issue of whether the petition stated a cause of action: The Court affirmed the CA's finding that the petition bristled with recitals of facts and statements demonstrating the petitioners' perpetration of devices and schemes amounting to fraud. The factual allegations, such as the MSE's recognition of TMBC's ownership of MSE Seat No. 97, the issuance of a PSE membership certificate to Recio, and Recio's consistent listing as a PSE member, were sufficient to constitute a cause of action against the petitioners. Matters such as the propriety of the refusal of TMBC's membership and the veracity of the assertion that MSE Seat No. 97 is separate from PSE Seat No. 29 are factual issues requiring evidentiary proof and are best threshed out in a full trial on the merits, not grounds for dismissal for lack of cause of action. On the issue of the propriety of mandamus: While acknowledging that mandamus generally cannot compel the performance of an official act involving discretion, the Court held that this rule does not apply in cases of gross abuse of discretion, manifest injustice, or palpable excess of authority. The Court found that the petitioners' refusal to acknowledge TMBC's proprietary interest over PSE Seat No. 29, despite the MSE's recognition of TMBC's ownership of MSE Seat No. 97 and the fact that MSE Seat No. 97 became PSE Seat No. 29, was grossly unjust and tyrannical. The issuance of a membership certificate to Recio and his consistent listing as a member in the PSE's Monthly Report belied the petitioners' claim that they could not acknowledge TMBC's interest. Therefore, the extraordinary writ of mandamus was controllable in this instance.
Main Doctrine
The denial of a motion to dismiss, being an interlocutory order, cannot generally be questioned via certiorari unless tainted with grave abuse of discretion amounting to lack or excess of jurisdiction. Furthermore, a complaint should not be dismissed if the court entertains doubts as to the truth of the facts averred, as factual issues are best ventilated during a trial on the merits.