Gokongwei v. Securities and Exchange Commission
REITERATIONFacts
The Antecedents: Petitioner John Gokongwei, Jr. sought to nullify a resolution by the Securities and Exchange Commission (SEC) which sustained the finding of the San Miguel Corporation's (SMC) Board of Directors that petitioner was engaged in a business competitive with or antagonistic to SMC, thus rendering him ineligible for election as director under Article III, Section 3 of the amended by-laws. Procedural History: The SEC en banc resolution dated May 7, 1979, sustained the disqualification. Petitioner alleged that the SEC should not have heard the matter due to a pending motion for reconsideration with the Supreme Court, that the respondents were precluded by the rule of pari delicto, and that the Board's resolution was an "over exertion of corporate power" to perpetuate themselves in power. The Petition: Petitioner sought review of the SEC resolution, arguing procedural infirmities and lack of substantial evidence.
Issue(s)
Whether the SEC erred in hearing the disqualification case despite a pending motion for reconsideration with the Supreme Court. Whether the rule of pari delicto precluded the respondents from disqualifying the petitioner. Whether the resolution of disqualification by the SMC Board constituted an "over exertion of corporate power" intended to perpetuate the Board in power. Whether the SEC's resolution was based on substantial evidence. Whether the SEC's findings warrant judicial intervention given the principle of limited judicial review of administrative findings.
Ruling
The petition is dismissed for lack of merit.
Ratio Decidendi
On the pendency of the motion for reconsideration: The Court found no merit in the petitioner's allegation that the matter should not have been heard due to a pending motion for reconsideration. The Court affirmed that the amended by-laws had presumptive validity at the time of the resolution. Furthermore, it was held that the validity of the amended by-laws, insofar as the parties were concerned, could no longer be relitigated based on the "law of the case" doctrine, meaning the enforcement of the by-laws was not ipso facto stayed by the motion for reconsideration. On the alleged disqualification of some Board members and pari delicto: The Court found the petitioner's assertion that some Board members were similarly disqualified and thus precluded respondents from disqualifying him to be inapposite. It was noted that the alleged disqualification of other Board members was never an issue during the hearing of the disqualification case, and the petitioner failed to submit any evidence to support this contention. On the "over exertion of corporate power" and perpetuation in office: The Court found the petitioner's assertion that the Board's resolution was an "over exertion of corporate power" to perpetuate themselves in power to be unsupported by the records. The resolution was based on evidence presented, not on an intent to maintain power. On the substantiality of evidence: The Court rejected the petitioner's claim that the SEC's order was based on "contingent and flimsy" evidence. The resolution was principally based on affidavits and documentary evidence demonstrating that the petitioner was engaged in agricultural and poultry businesses competitive with San Miguel Corporation. The petitioner did not adduce any evidence to rebut this finding. On judicial review of administrative findings: The Court reiterated the well-settled principle that findings of fact of administrative bodies will not be interfered with by the courts in the absence of grave abuse of discretion on the part of said agencies, or unless the aforementioned findings are not supported by substantial evidence. The Court found no such grave abuse of discretion or lack of substantial evidence in the SEC's resolution.
Main Doctrine
The enforcement of amended by-laws, even pending a motion for reconsideration, cannot be stayed if the validity of such by-laws has already been settled under the 'law of the case' doctrine. Findings of fact by administrative bodies are generally upheld unless there is grave abuse of discretion or lack of substantial evidence.