GR 52129; (April, 1980) (Digest)
G.R. No. L-52129. April 21, 1980
JOHN GOKONGWEI, JR., petitioner, vs. SECURITIES AND EXCHANGE COMMISSION, SAN MIGUEL CORPORATION, ANDRES M. SORIANO, JOSE M. SORIANO, ENRIQUE ZOBEL, ANTONIO ROXAS, EMETERIO BUNAO, WALTHRODE B. CONDE, MIGUEL ORTIGAS, EMIGDIO TANJUATCO and EDUARDO VISAYA, respondents.
FACTS
Petitioner John Gokongwei, Jr., a stockholder of San Miguel Corporation (SMC), sought to nullify the Securities and Exchange Commission (SEC) en banc resolution dated May 7, 1979. The SEC sustained the SMC Board of Directors’ finding that Gokongwei was engaged in a business competitive with SMC, rendering him ineligible for election as a director under Section 3, Article III of SMC’s amended by-laws. Gokongwei challenged this disqualification on procedural and substantive grounds.
He argued that the SEC should not have heard the disqualification case due to a pending motion for reconsideration before the Supreme Court in a related case. He also contended that the SMC Board’s action was an “over exertion of corporate power” intended to perpetuate itself, and that the rule of pari delicto should apply, as some board members were similarly engaged in competitive businesses. Furthermore, he alleged that the evidence for his disqualification was “contingent and flimsy.”
ISSUE
The primary issue was whether the SEC committed grave abuse of discretion in upholding the SMC Board’s resolution disqualifying Gokongwei as a director for engaging in a competitive business under the corporation’s amended by-laws.
RULING
The Supreme Court dismissed the petition for lack of merit. The Court held that the SEC did not commit grave abuse of discretion. On the procedural aspect, the Court found that the amended by-laws enjoyed presumptive validity at the time of the SEC resolution. Moreover, the “law of the case” doctrine, as established by the opinions of the Chief Justice and six Justices in the related case (G.R. No. L-45911), precluded relitigation of the by-laws’ validity concerning the parties herein. Therefore, the pending motion for reconsideration did not ipso facto stay the enforcement of the by-laws.
Substantively, the Court ruled that Gokongwei’s claim of pari delicto was inapposite, as the alleged disqualification of other board members was never raised as an issue during the hearing, and he presented no evidence to support it. Regarding the sufficiency of evidence, the Court found the SEC’s order was based on substantial evidence, including affidavits and documentary proof showing Gokongwei’s engagement in the agricultural and poultry business, which competed with SMC. Gokongwei failed to adduce any rebuttal evidence. The Court reiterated the settled doctrine that factual findings of administrative agencies like the SEC, when supported by substantial evidence and absent grave abuse of discretion, are accorded respect and finality.