The First National Bank of Boston vs. Josefina L. Pasay-Paz, et al.

[SEC-EB NO. 251. September 14, 1990.] THE FIRST NATIONAL BANK OF BOSTON, ET AL. , petitioners , vs . The Honorable Hearing Officers JOSEFINA L. PASAY-PAZ and YSOBEL S. YASAY-MURILLO, ET AL. , respondents . R E S O L U T I O N Before this Commission en banc is a petition for certiorari and prohibition with a prayer for a writ of preliminary injunction filed by respondents in SEC Case No. 3657 entitled "Elena S. Lim, et al. vs. First National Bank of Boston, et al." Herein petitioners allege grave abuse of discretion on the part of the hearing officers in the issuance of their orders dated 13 July 1990 and 16 July 1990. The 13 July 1990 order reconsidered an earlier order and disqualified the law firm of Herrera, Laurel, de los Reyes, Roxas and Teehankee "to appear, represent and undertake the defense for and in behalf of respondents First National Bank of Boston, Boston World Holdings Corporation, Benjamin Sevilla, Tomas A. Troy, John Mechem, John O. Tan, Jr., Hermenegildo Cabilao and Cabien Corporation." Considering, however that the law firm of Herrera, Laurel, de los Reyes, Roxas and Teehankee has withdrawn its representation in the proceedings a quo, the instant petition, insofar as it questions the 13 July 1990 order, is now moot and academic. Thus, the only order up for review is the 16 July 1990 order which granted petitioners a quo's application for the issuance of a writ of preliminary injunction enjoining respondents a quo "from selling or in any way disposing in favor of any third person the shareholdings of Boston Bank of the Philippines specially those pertaining to the petitioner Elena S. Lim and/or Ace Solid Holdings Corporation". This Commission en banc, in its order dated 7 August 1990, resolved to issue a temporary restraining order "limiting the prohibition against disposition in the 16 July 1990 order to the shareholdings of Boston Bank of the Philippines pertaining only to Elena S. Lim and/or Ace Solid Holdings Corporation, until further orders of this Commission." Said temporary restraining order lapsed by its own terms twenty days after its issuance. On 16 August 1990, herein private respondents filed with this Commission en banc a motion to dismiss the instant petition on the following grounds: (a) "It having been admitted that the orders sought to be reviewed had never been subjected for reconsideration and that they are interlocutory in character, this Commission en banc has no jurisdiction to entertain the instant petition," and (b) "the issuance of a writ of preliminary injunction and the disqualification of the law firm of Herrera, Laurel, de los Reyes, Roxas & Teehankee are acts done within the jurisdiction of the hearing officers and are matters of judgment and not of jurisdiction, hence, certiorari cannot be availed of against the respondents." On 30 August 1990, private respondents filed their "Additional Argument in Support of Motion to Dismiss". On 3 September 1990, private respondents filed a "Motion for Contempt" alluding to a newspaper report to the effect that "petitioners" are reportedly going ahead with the disposition of the shares". Hearings were conducted and both parties submitted all the incidents as well as the petition itself for resolution by this Commission en banc. The first issue to be resolved by this Commission en banc is private respondents' motion to dismiss. Private respondents argue that the filing of a motion for reconsideration is a necessary pre-requisite for the filing of a petition for certiorari. Such rule, however-admits of certain exceptions, as when the petition alleges, as in this case, that the questioned order is a patent nullity (Vigan Electric Light Company, Inc. vs. Public Service Commission, L-19850, Jan. 30, 1964; Luzon Surety Co. vs. Marbella, et al., L-16088, Sept. 30, 1960; Dir. of Lands vs. Santamaria, G.R. No. 20151, March 6, 1923, 44 Phil. 594). Private respondents further argue that the questioned orders are interlocutory and hence cannot be the subject matter of a petition for certiorari. This rule likewise admits of exceptions. Where the petition alleges not merely error of judgment but grave abuse of discretion as is equivalent to lack of jurisdiction, certiorari may lie: SECTION 1. Petition For Review or Certiorari . The Commission en banc may entertain a petition for review or certiorari when it appears on the face of the petition that the Hearing Officer has acted without or in excess of his jurisdiction or with grave abuse of discretion in issuing said order and there is no plain, speedy or adequate remedy in the ordinary course of law. ( Sec. 1 Rule XV, Revised Rules of Procedure of the SECURITIES AND EXCHANGE COMMISSION ; adapted from Sec. 1, Rule 65 of the Revised Rules of Court.) Consequently, private respondents arguments in support of their motion to dismiss are untenable. The second incident pending before this Commission en banc, is the application for the issuance of a writ of preliminary injunction to enjoin respondents from giving force and effect to the hearing officers' order dated 16 July 1990. With the expiration of the 7 August 1990 temporary restraining order and the resolution of the instant petition, there is no longer any need to resolve said application. The third incident involves private respondents' motion for contempt. During the hearing before this Commission en banc, petitioners' counsel categorically state that there has been no disposition of the shares, as erroneously reported in the newspapers. Consequently, there is no factual basis to grant the motion for contempt. We now come to the resolution of the petition itself. The 16 July 1990 order granted petitioners a quo's application for the issuance of a writ of preliminary injunction enjoining respondents a quo "from selling or in any way disposing in favor of any third person the shareholdings of Boston Bank of the Philippines specially those pertaining to the petitioner Elena S. Lim and/or Ace Solid Holdings Corporation". The prohibition against the disposition of the shares in Boston Bank of the Philippines as contained in the order of 16 July 1990 includes shares in Boston Bank of the Philippines that are not even the subject matter of the proceedings a quo. Clearly, to include unlitigated shares in the all encompassing prohibition against sale would infringe on the property right of alienation over shares which private respondents do not even claim ownership of. A closer reading of the text of the hearing officers' order of 16 July 1990 would indicate that the intent was to enjoin the sale of the "contested shareholdings" (page 4 of the order). The dispositive portion of the order however adopted in toto the private respondents' prayer in their Motion for Issuance of a Writ of Preliminary Injunction" file a quo on 7 May 1990, and includes the phrase "specially those", thereby giving the impression that the prohibition against disposition covered ALL shareholdings of Boston Bank of the Philippines. However, insofar as the preliminary injunction against the contested shares, i.e., ONLY the shareholdings of Boston Bank of the Philippines pertaining to the petitioner Elena S. Lim and/or Ace Solid Holdings Corporation, the hearing officers correctly held that "[u]ntil the ownership of the shares, therefore, is passed upon, it is inconceivable that any party can rightfully claim the same to be their exclusive property with the attributes of ownership attendant, particularly jus disponendi." WHEREFORE, premises considered, this Commission en banc hereby RESOLVES to: 1. DENY, for lack of merit, private respondents motion to dismiss the instant petition; 2. DENY, for lack of merit, private respondents motion for contempt; 3. DENY, for having been rendered moot with this resolution on the main petition, petitioners' application for a writ of preliminary injunction; 4. DENY, for having been rendered moot with the withdrawal of the representation the law firm of Herrera, Laurel, de los Reyes, Roxas and Teehankee in the proceedings a quo, the instant petition insofar as it questions the 13 July 1990 order; and 5. GRANT the petition insofar as the 16 July 1990 order is concerned and MODIFY said order by limiting the prohibition against disposition in said order to the shareholdings of Boston Bank of the Philippines pertaining only to Elena S. Lim and/or Ace Solid Holdings Corporation. LexLib SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (SGD.) GONZALO T. SANTOS, JR. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner Associate Commissioner (SGD.) ARMANDO Z. GONZALES (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner