CEMCO HOLDINGS v.

NATIONAL LIFE INSURANCE COMPANY OF PHILIPPINES, GR

NO. 171815, 2007-08-07
Facts:
Union Cement Corporation (UCC), a publicly-listed company, has two principal stockholders
- UCHC, a non-listed company, with shares amounting to 60.51%, and petitioner Cemco
with 17.03%. Majority of UCHC's stocks were owned by BCI with 21.31% and ACC with
29.69%. Cemco, on the... other hand, owned 9% of UCHC stocks.
BCI informed the Philippine Stock Exchange (PSE) that it and its subsidiary ACC had
passed resolutions to sell to Cemco BCI's stocks in UCHC equivalent to 21.31% and ACC's
stocks in UCHC equivalent to 29.69%.
Issues:
Simply stated, the following are the issues:
Whether or not the SEC has jurisdiction over respondent's complaint and to require Cemco
to make a tender offer for respondent's UCC shares.
Whether or not the rule on mandatory tender offer applies to the indirect acquisition of
shares in a listed company, in this case, the indirect acquisition by Cemco of 36% of UCC, a
publicly-listed company, through its purchase of the shares in UCHC, a non-listed...
company.
Whether or not the questioned ruling of the SEC can be applied retroactively to Cemco's
transaction which was consummated under the authority of the SEC's prior resolution.
Ruling:
Petitioner's stance fails to persuade.
The foregoing provision bestows upon the SEC the general adjudicative power which is
implied from the express powers of the Commission or which is incidental to, or reasonably
necessary to carry out, the performance of the administrative duties entrusted to it.
as the incidental power to conduct hearings and render decisions
SEC has the competence to render the particular decision it made in this case.
SEC has the authority to promulgate rules and regulations, subject to the limitation that the
same are consistent with the declared policy of the Code.
The power conferred upon the SEC to promulgate rules and regulations is a legislative
recognition of the complexity and the constantly-fluctuating nature of the market and the
impossibility of foreseeing all the possible contingencies that cannot be addressed in
advance.
petitioner is barred from questioning the jurisdiction of the SEC. It must be pointed out that
petitioner had participated in all the proceedings before the SEC and had prayed for
affirmative relief.
Petitioner did not question the jurisdiction of the SEC when it rendered an opinion favorable
to it
It was only when the case was before the
Court of Appeals and after the SEC rendered an unfavorable judgment against it that
petitioner challenged the SEC's competence.
Principles:
Tender offer is a publicly announced intention by a person acting alone or in concert with
other persons to acquire equity securities of a public company.[12] A public company is
defined as a corporation which is listed on an... exchange, or a corporation with assets
exceeding P50,000,000.00 and with 200 or more stockholders, at least 200 of them holding
not less than 100 shares of such company.[13] Stated differently, a tender offer is an offer
by the acquiring person to... stockholders of a public company for them to tender their
shares therein on the terms specified in the offer.[14] Tender offer is in place to protect
minority shareholders against any scheme that dilutes the share value of their investments.
It gives the... minority shareholders the chance to exit the company under reasonable
terms, giving them the opportunity to sell their shares at the same price as those of the
majority shareholders.[15]
The rule in this jurisdiction is that the construction given to a statute by an administrative
agency charged with the interpretation and application of that statute is entitled to great
weight by the courts, unless such construction is clearly shown to be in sharp contrast
with... the governing law or statute.[18] The rationale for this rule relates not only to the
emergence of the multifarious needs of a modern or modernizing society and the
establishment of diverse administrative agencies for addressing and satisfying those
needs;... it also relates to accumulation of experience and growth of specialized capabilities
by the administrative agency charged with implementing a particular statute.[19]