G.R. No. 54330 , January 13, 1989
JULIO E. T. SALES, et al., petitioners, vs. SECURITIES AND EXCHANGE COMMISSION, et al., respondents.

FACTS

Petitioners, minority stockholders of Sipalay Mining Exploration Corporation, sought to nullify the sale of 198,500,000 Sipalay shares to respondent Vulcan Industrial and Mining Corporation (VULCAN). The shares originated from a 1974 sales agreement where Sipalay sold 200,000,000 shares to State Investment House, Inc., which contained a condition that State Investment would issue a voting trust in favor of Sipalay’s Board until the shares were sold to the public. State Investment later sold the shares to Anselmo Trinidad & Co., Inc. (ATCO), which voted them for years. In 1978, ATCO sold 198,500,000 of these shares to VULCAN.
Prior to Sipalay’s 1979 annual stockholders’ meeting, petitioners filed a petition with the SEC to nullify the sale to VULCAN and to enjoin it from voting the shares. The SEC initially issued a temporary restraining order, preventing VULCAN from voting at the 1979 meeting. Subsequently, the SEC, after hearings, issued an order on June 13, 1980, denying petitioners’ application for a preliminary injunction, lifting the prior restraining order, and directing that the disputed shares be counted for quorum and voting in the forthcoming 1980 meeting. The SEC also created a committee to supervise the meeting. Petitioners challenged these SEC orders via certiorari, alleging grave abuse of discretion.

ISSUE

Did the Securities and Exchange Commission commit grave abuse of discretion in denying the petitioners’ application for a writ of preliminary injunction to restrain VULCAN from voting the disputed shares?

RULING

No, the SEC did not commit grave abuse of discretion. The Supreme Court emphasized that a preliminary injunction is an extraordinary remedy to preserve the status quo and prevent threatened irreparable injury. The grant or denial thereof rests on the sound discretion of the tribunal, whose determination will not be disturbed absent a clear showing of abuse. Petitioners failed to establish a clear legal right warranting protection by injunction. Their claim hinged on the alleged invalidity of the share transfer to VULCAN due to the unfulfilled voting trust condition in the original 1974 agreement. However, the Court noted that Sipalay’s Board had consistently recognized the transfers—first to ATCO and then to VULCAN—without objection for years, and had even directed the issuance of new certificates to VULCAN. This constituted ratification, rendering the voting trust condition ineffective.
Furthermore, petitioners did not demonstrate an imminent, irreparable injury. The injunction they sought would deprive VULCAN of its voting rights based on an unproven claim, potentially causing VULCAN greater damage. The SEC correctly balanced the equities, finding no clear right of petitioners to be protected and that the injunction would cause more harm to VULCAN. Thus, the SEC’s orders were a proper exercise of discretion, not reviewable by certiorari. The petition was dismissed.