Abad v. Construction and Development Corporation of the Philippines

[SEC-EB NO. 350. September 16, 1993.] (SEC CASE No. 4014) (SEC-EB No. 285) RAMONCITO Z. ABAD, ET AL. , petitioners , vs . CONSTRUCTION AND DEVELOPMENT CORPORATION OF THE PHILIPPINES, RODOLFO M. CUENCA, ET AL. , respondents . D E C I S I O N The case now before the Commission is a Petition for Certiorari dated 11 February 1993, where petitioners prayed that the Order dated 20 January 1993 issued by the Hearing Panel be set aside insofar as it denied the prayer for the dismissal in the motion for reconsideration and, in lieu thereof, issue an Order dismissing the case below (SEC Case No. 4014) with finality. Petitioners alleged that the questioned Order is null and void for having been issued without jurisdiction and/or grave abuse of discretion and should therefore be set aside. LLpr The pertinent facts may be summarized as follows: Petitioners sought an action for prohibition and mandamus with prayer for preliminary injunction/restraining order, praying inter alia that respondents cease and desist from exercising the powers, functions and duties of officers/directors of CDCP, and to turn over the management, control and operation, including the assets of the corporation . . . to the duly elected/appointed officers/directors, namely the petitioners therein. On 14 June 1991, the Hearing Panel in the case below entitled "Construction and Development Corporation of the Philippines (CDCP), represented by its newly elected Board of Directors, namely: Rodolfo M. Cuenca, et al. v. Ramoncito Z. Abad, et al.", issued an Order directing the respondents therein to file their Answer, and a Temporary Restraining Order (TRO) enjoining respondents from performing powers, functions of officers/members of the board of directors of CDCP (now PNCC). On 17 June 1991, the respondents therein, Ramoncito Abad, et al., filed a Petition for Certiorari with the En Banc in SEC-EB No. 285 praying that the Temporary Restraining Order dated 14 June 1991 in SEC 4014 be lifted and ordered null and void. On 19 June 1991, the Commission En Banc issued a TRO enjoining respondents and all other persons acting under them from enforcing and/or giving effect to the Order dated June 14, 1991 and from further conducting proceedings in SEC 4014. On 9 July 1991, the Commission En Banc decided to hold in abeyance EB-285 and proceedings in SEC 4014 including applications for injunctive reliefs pending resolution of the petition filed by the GSIS before the Supreme Court. The foregoing cases is an offshoot of a Letter of Instruction (LOI) No. 1295 , promulgated by then President Marcos which ordered the conversion, as of 31 December 1982, of all the direct obligations of CDCP and those of the wholly-owned subsidiaries to government financial institutions . . . into shares of common stock of CDCP at par value. On 30 May 1991, Rodolfo Cuenca, et al., called a special meeting of stockholders of CDCP for the election of officers/directors of CDCP. On June 7, 1991, the Cuenca group instituted SEC Case No. 4014, asking the Commission to enjoin respondents (Ramoncito Abad, et al.) from performing their functions/duties as officers/directors of CDCP . . . Then on 19 June 1991, the Abad group received a copy of the petition filed by the GSIS before the Supreme Court "to restrain the respondents from the continued implementation of LOI 1295 . . . which LOI was not published and therefore has no force and effect". On 22 November 1991, respondents (Cuenca Group) filed a Motion to Lift Order Holding in Abeyance Proceedings in SEC Case No. 4014. On 22 January 1992, the Commission En Banc issued an Order dismissing the petition for being moot and academic with the lapse of the temporary restraining order issued by the hearing panel, and lifting the earlier order of the Commission dated 9 July 1991 holding in abeyance the proceedings. At the resumption of the proceedings in the case below, Cuenca group moved to declare Abad group in default on 31 January 1992. On 3 February 1992, Abad group filed a motion to dismiss. On 14 July 1992, the Hearing Panel issued an order declaring the respondents (Abad group) in default and denied the motion to dismiss. Abad group filed a motion for reconsideration, where the questioned Order dated 20 January 1993 of the Hearing Panel was issued, granting the motion for reconsideration insofar as the order of default is concerned, but denied the same insofar as it prayed for the dismissal of SEC Case No. 4014 is concerned. Hence, this instant petition before us. As synthesized from the foregoing, the lone issue is: Whether or not the Hearing Panel acted with grave abuse of discretion when it issued the assailed Order of 20 January 1993 insofar as it denied the prayer for the dismissal in the motion for reconsideration. Petitioners advanced the following in support of the instant petition: 1.) The Commission has no jurisdiction over SEC Case No. 4014, specifically to determine the constitutionality of LOI No. 1295 ; 2.) SEC Case No. 4014 has become moot and academic by virtue of the Supreme Court's resolution in G.R. No. 101057, entitled "Children's Garden of the Philippines, et al. v. Asset Privatization Trust, et al. 3.) The Commission has no jurisdiction to review the President's power of control and appointment over government owned or controlled corporations. 4.) Petition in SEC Case No. 4014 states no cause of action. 5.) Respondents cause of Action in SEC Case No. 4014 is barred by prescription and estoppel. Respondents, in their Answer, made a general and specific denials of the allegations of the Petition, and raised therein special defenses. dctai We find the petition without merit. We agree that the Commission has no jurisdiction to determine the constitutionality of LOI No. 1295 . However, in the case below, that is not what the Commission was asked to determine but the propriety of the issuance or non-issuance of the writ of preliminary injunction and the question of entitlement to the management, control and operation of the subject corporation. The final relief asked for in SEC Case No. 4014 was "to compel the respondents (petitioners herein) to turn over the management, control and operation, including the assets of the corporation, and the offices/premises they presently are occupying to the duly elected/appointed officers/members of the board of directors, namely the complainants therein. Secondly, the herein invoked G.R. No. 101057 entitled "Children's Garden of the Philippines, et al. v. APT, et al." did not render SEC Case No. 4014 moot and academic considering that the parties are different, cause of action is different as well as the reliefs prayed for. In said case, petitioners Children's Garden of the Philippines, Inc., Acacia Mutual Aid Society, Amtel Trading Corporation, Unigrowth Dev., Inc. and Edgardo C. Ylo, for themselves and in behalf of 5,600 stockholders of CDCPl filed a Petition for Prohibition and Mandamus seeking to enjoin APT, Ramoncito Abad, et al., in their official capacity as designated officers/directors of PNCC ( formerly CDCP). The Supreme Court declared that LOI No. 1295 merely authorized the government financial institution to write off the liabilities of CDCP to them in exchange for equity. This case involves more of the issue of constitutionality of LOI 1295 , different from the issues in SEC Case No. 4014 where the parties are different, cause of action is different as well as the reliefs prayed for. With respect to the ground that the petition below states no cause of action, the rule is when a motion to dismiss is based on the ground that the complaint states no cause of action, no evidence may be allowed and the issue should only be determined in the light of the allegations of the complaint or petition. (Dimayuga v. Dimayuga, G.R. No. L-6740, April 29, 1955, 51 O.G. 2397) The test of sufficiency of the facts to constitute a cause of action is whether or not, admitting the facts alleged, the court could render a valid judgment upon the same in accordance with the prayer. (Madrona Sr. v. Rosal, G.R. No. 39120, November 21, 1991) ". . . so rigid is the norm prescribed that if the court should doubt the truth of the fact averred, it must not dismiss the complaint but require an Answer and proceed to hear the case on the merit". (Also Tan v. Standard Vacuum Oil Co., G.R. No. L-4160, July 29, 1952, 48 O.G. 2745) Examining all the records of this case, we find that the facts alleged therein are sufficient to constitute a cause of action. ". . . Where the case was presented to District Court upon a motion to dismiss because of alleged failure of complaint to state a claim upon which relief could be granted, and no answer was interposed and no evidence introduced, the only facts which the Court could properly consider in passing upon the Motion were those facts appearing in the complaint, supplemented by such facts as the court judicially know". (Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983) In the case at bar, petitioners have not yet filed their Answer in the case below and no evidence has yet been introduced for the Commission to properly consider. Petitioners claim that SEC Case No. 4014 is barred by the statute of limitations or estoppel. This is not tenable for petition below was filed on June 7, 1991, or barely a week from the time their right of action existed. If petitioners wish to present evidence controverting the truth of the allegations in the petition below, then they must wait for the opportune time, that is, at the trial of the case. Still there is that issue on whether or not "the incumbent Board of Directors of PNCC can remain in office without the benefit of an annual election in a stockholders' meeting called for the purpose." Other items are matters of evidence which could only be ascertained or resolved after due hearing. In sum and given the surrounding circumstances, we so rule that the Hearing Panel did not commit grave abuse of discretion in issuing the assailed order. WHEREFORE, the petition is hereby DISMISSED for lack of grave abuse of discretion committed by the respondent Hearing Officer and the Order dated 14 June 1991 is hereby reinstated insofar as it directed the respondents (Abad group) to file their Answer, and for the resumption of the proceedings in SEC Case No. 4014. This likewise AFFIRMED the questioned Order of 20 January 1993 insofar as it denied the prayer for the dismissal in the motion for reconsideration in said SEC Case No. 4014. prcd SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (SGD.) RODOLFO L. SAMARISTA (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner (SGD.) FE ELOISA C. GLORIA (SGD.) PERFECTO R. YASAY, JR. Associate Commissioner Associate Commissioner