8/13/2019 CEMCO vs. National Life Insurance Co.

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CEMCO vs. National Life Insurance Co.G.R. No. 171815 August 7, 2007

FACTS:Union Cement Corporation (UCC), a publicly listed company, has two principal stockholders –

UCHC, a non listed company, and petitioner CEMCO. A majority of UCHC’s stocks were owned byBacnotan Consolidated Industries (BCI) and Atlas Cement Corporation (ACC ). CEMCO holds 9% of UCHC’sstocks. BCI informed the Philippine Stock Exchange that its subsidiary ACC had passed resolutions to sellto CEMCO all their stocks in UCHC. PSE sent a letter to SEC to inquire as to whether the Tender OfferRule under the Securities Regulation Code would apply. The SEC replied that the transaction is notcovered by the tender offer rule.

On August 12, 2004, the sale of the stocks was consummated and closed. National Life InsuranceCo. of the Philippines, a minority stockholder in UCC filed a complaint with the SEC asking the latter todeclare the purchase agreement void for being violative of the tender offer rule. CEMCO file a commentto the complaint. The SEC ruled in favor of National Life Insurance and declared the transaction to bevoid for being in violation of the tender offer rule. CEMCO filed a petition with the Court of Appealschallenging the SEC’s jurisdiction on the ground that the SEC’s authority is purely administrative and

does not extend to adjudication. The CA upheld the SEC’s ruling. It ruled that CEMCO is stopped inquestioning the jurisdiction of the SEC. Hence, this present petition.

ISSUE: Whether or not SEC has jurisdiction

HELD: YesSEC was acting pursuant to Rule 19 (13) of the Amended Implementing Rules and Regulation of

the Securities Regulation Code. The forgoing rule emanates from the SEC’s power and authority toregulate, investigate or supervise the activities of persons to ensure compliance with the SecuritiesRegulation Code more specifically the provision on mandatory tender offer.