GR 97505; (March, 1993) (Digest)
G.R. No. 97505 March 1, 1993
RAMON U. VILLAREAL, petitioner, vs. THE COURT OF APPEALS, SECURITIES & EXCHANGE COMMISSION, UNITED COCONUT PLANTERS BANK and UNITED BICOL SAVINGS BANK, respondents.
FACTS
Petitioner Ramon U. Villareal was a preferred stockholder and director of Bicol Savings and Loan Association, Inc. (BSLA). On September 18, 1981, a special stockholders’ meeting was held where stockholders owning more than two-thirds of the outstanding capital stock approved: (a) the decrease of authorized capital stock from P2,500,000 to P1,000,000; (b) the increase from P1,000,000 to P14,285,000; (c) the change of corporate name to United Bicol Savings Bank (UBSB); and (d) the subscription of United Coconut Planters Bank. The Central Bank issued a Certificate of Authority on March 29, 1983. The Securities and Exchange Commission (SEC) issued certificates of decrease and increase of capital stock on September 28, 1984. On December 23, 1988, petitioner filed a letter-complaint with the SEC alleging anomalous manipulations in the approval of the applications for decrease and increase of capital stock. The SEC dismissed the complaint for lack of merit on July 5, 1989, based on its Corporate and Legal Department’s verification of documents. Petitioner appealed to the Court of Appeals, which affirmed the SEC’s dismissal. Petitioner then filed this Petition for Review before the Supreme Court.
ISSUE
1. Which of the two conflicting certificates are valid: the Central Bank Certificate of Authority dated March 29, 1983 increasing the capital stock from P2.5M to P14.285M, or the SEC Certificates of Decrease (to P1M) and Increase (to P12.285M) dated September 28, 1984?
2. Was there a violation of due process when the SEC en banc summarily dismissed the letter-complaint based on the findings of its Corporate and Legal Department without conducting hearings?
RULING
1. The Supreme Court found the SEC Certificates of Decrease and Increase of Capital Stock to be valid. The Court held there was substantial compliance with Section 38 of the Corporation Code. The documentary evidence established that: a stockholders’ meeting was duly held on September 18, 1981; written notices were sent to each stockholder; and the decrease and increase were approved by a majority of the Board of Directors and by two-thirds of the outstanding capital stock. The date of September 18, 1984, on the SEC certificate was a typographical error. The capital stock was decreased to eliminate deficit and later increased by additional capital infusion. The reduction in par value of shares was a valid method of decreasing capital stock. The administrative findings of fact by the SEC, supported by substantial evidence, are accorded respect and finality.
2. There was no violation of due process. The essence of due process is the opportunity to be heard. Petitioner was afforded this opportunity through his letter-complaint with supporting documents and his appeals to the Court of Appeals and Supreme Court. A formal hearing was not necessary as the issues could be resolved by a mere verification of the BSLA records with the SEC. The Petition was DENIED for lack of merit.