GR L 4228; (January, 1952) (Digest)
G.R. No. L-4228 January 23, 1952
SECURITIES AND EXCHANGE COMMISSION, petitioner-appellee, vs. MARCOS PIMENTEL, respondent-appellant.
FACTS
Nieves G. Argonza and Placida G. delos Reyes filed charges with the Securities and Exchange Commission (SEC) against Marcos Pimentel and Julia B. Pimentel, the president and treasurer of International Colleges, Inc. The SEC believed the complaint involved a violation of Section 51 of the Corporation Law (requiring corporations to keep records of business transactions) and ordered a trial examination of the corporation’s books and records. A subpoena duces tecum was issued commanding Marcos Pimentel to deliver the specified books and records. Pimentel refused to comply and filed an opposition to the examination order, which the SEC overruled. After Pimentel again refused a subsequent demand, the SEC filed a proceeding in the Court of First Instance of Manila to declare him in contempt. The court found Pimentel guilty of contempt, imposed a fine of P50,000 with subsidiary imprisonment, and ordered him to produce the books and records. Pimentel appealed.
ISSUE
Whether the Securities and Exchange Commission has the power, under Commonwealth Act No. 287 , to order the examination of a corporation’s books and records to enforce laws affecting corporations, specifically Section 51 of the Corporation Law, beyond matters relating merely to the registration of corporations.
RULING
Yes. The Supreme Court affirmed the appealed decision. The SEC’s power under Commonwealth Act No. 287 is twofold: (1) it inherits the powers of the Bureau of Commerce concerning the registration of corporations, and (2) it is expressly “charged with the enforcement of all laws affecting corporations and associations.” This second power is unqualified and distinct, and the proviso that it shall not affect powers exercised by other government bureaus over certain classes of corporations does not apply here, as no other bureau is claimed to have the power to investigate violations of Section 51 of the Corporation Law. The Court rejected Pimentel’s arguments that the power was limited to registration matters, that only stockholders or officers could examine the books under Section 51 (the examination is by the SEC under its legal authority), and that only the President possesses visitorial power (which is not exclusive and does not impair the SEC’s function). The Court found no absurdity in this interpretation, as the law already safeguards against overlapping functions.