G.R. No. 198425, G.R. No. 201174, G.R. No. 244462, January 30, 2024.
SECURITIES AND EXCHANGE COMMISSION, PETITIONER, VS. HON. RODOLFO R. BONIFACIO, IN HIS CAPACITY AS THE PRESIDING JUDGE OF THE REGIONAL TRIAL COURT, BRANCH 159, PASIG CITY, PHILIPPINE ASSOCIATION OF SECURITIES BROKERS AND DEALERS, INC. (PASBDI), MA. VIVIAN YUCHENGCO, ISMAEL G. CRUZ, NESTOR S. AGUILA, AND MARITA A. LIMLINGAN, PHILIPPINE STOCK EXCHANGE (PSE) PSE’S 2009 NOMINATIONS AND ELECTIONS COMMITTEE (NOMELEC), RESPONDENTS. [Consolidated Cases]

FACTS

The Securities and Exchange Commission (SEC) issued directives to the Philippine Stock Exchange (PSE) to comply with Section 33.2(c) of the Securities Regulation Code (Republic Act No. 8799), which limits ownership or control of a stock exchange to no more than 5% for any single person and 20% for any industry or business group. The SEC determined that brokers constituted an “industry or business group” and their collective ownership in PSE exceeded the 20% limit. The SEC initially granted PSE temporary exemptive relief but later denied a permanent exemption and directed PSE to impose a limit on the voting rights of brokers as a group to 20% of the total outstanding stock in stockholders’ meetings until compliance. For the 2010 and 2011 Annual Stockholders’ Meetings, the SEC reiterated this directive. The Philippine Association of Securities Brokers and Dealers, Inc. (PASBDI) and individual broker-shareholders filed a case before the Regional Trial Court (RTC) to enjoin the enforcement of this voting limitation. The RTC granted a writ of preliminary injunction, allowing the brokers to vote their entire shareholdings in the 2010 and 2011 meetings, and later rendered a Decision permanently enjoining the SEC and PSE from imposing the limitation. The SEC’s petitions to the Court of Appeals were dismissed. The SEC elevated the cases to the Supreme Court, arguing that the RTC had no jurisdiction over its quasi-legislative acts and that the injunction was improperly granted.

ISSUE

The primary issue is whether the Regional Trial Court had jurisdiction over the case filed by PASBDI, et al., which assailed the SEC’s directives imposing a limit on the voting rights of brokers as an industry group in PSE stockholders’ meetings, considering that said directives were issued in the exercise of the SEC’s quasi-legislative power.

RULING

The Supreme Court ruled that the Regional Trial Court had NO JURISDICTION over the case. The SEC’s directives, including Resolution No. 86, series of 2010, and the related letters/orders enforcing the 20% voting limitation on brokers, were issued pursuant to its quasi-legislative or rule-making power under the Securities Regulation Code. Actions assailing the validity or constitutionality of rules, regulations, and other issuances of administrative agencies exercising quasi-legislative power fall within the exclusive appellate jurisdiction of the Court of Appeals under Section 4, Rule 65 of the Rules of Court, in relation to the doctrine of hierarchy of courts. The RTC, therefore, acted without jurisdiction when it took cognizance of the case and issued the writ of preliminary injunction and the subsequent Decision. Consequently, the Supreme Court granted the SEC’s petitions, annulled and set aside the assailed RTC and CA rulings, and dismissed the complaints filed by PASBDI, et al. for lack of jurisdiction.