SEC Case No. 12-10-333 In the matter of Arnulfo S. Pilando, Christine B. Wangdali and Antonio Alvarez Petitioners, versus Nerissa Orodio, Benjamin De Sesto, Marrietta Jambaro, Efraim Orodio, Samuel Garcia and any and all of the other Board of Directors and/or Officers of the Rural Bank of Rizal (K.A.), Inc., Respondents.

Securities and Exchange Commission Republic of the Philippines Department of Finance Pasay City, Philippines

In the matter of Arnulfo S. Pilando, Christine B. Wangdali and An- tonio Alvarez Petitioners,

baro, Efraim Orodio, Samuel Garcia and any and all of the other Board of Directors and/or Nerissa Orodio, Benjamin De Sesto, Marrietta Jam- Rural Bank of Rizal (K.A.), Inc.. Officers of the Versus Respondents. SEC Case No.12-10-333

DECISION

baro, Efraim Orodio, Samuel Garcia and any and all of the other Board of Directors and/or Officers of the Rural Bank of Rizal (K.A.), Inc. (Respondents). This originated from SEC Case No. 3-10-304 where the Peti tioners prayed that a meeting be called by the Commission.2 B. Wangdali and Antonio Alvarez (Petitioners) against Nerissa Orodio, Benjamin De Sesto, Marrietta Jam- This resolves the Petition to Cite or Punish for Indirect Contempti filed by Arnulfo S. Pilando, Christine

duct its Annual Stockholders meeting on the first Saturday of July 2010, or 3 July 2010.3 On 3 June 2010, the Commission in its Order granted the petition and ordered the corporation to con-

hough they have not received any notices of holding of such meeting. Upon arriving at the principal office of the Respondent Corporation, the same is locked without any person at the site.4 On 3 July 2010, Petitioners sent their representatives to attend the annual stockholder's meeting alt-

Thus, this they filed this instant Petition. This petition has merit.

with the Corporation Code, and P.D. 902-A. In Bernas v. Cinco,5 the Supreme Court reiterated the Commis- sions power to compel corporations to call meetings: The Commission has the power to compel corporations to hold a stockholders meeting, in accordance

call a meeting, the SEC can assume jurisdiction and issue an order to the petitioning stockholder to call a meeting pursuant to its regulatory and administrative powers to implement the Corpora- tion Code. This is clearly provided for by Section 50 of the Corporation Code which we quote: Where there is an officer authorized to call a meeting and that officer refuses, fails, or neglects to

Sec. 50. Regular and special meetings of stockholders or members. - x x x X X X X

Dated 2 Dec. 2010. Pilando Pet. at 3

G.R. Nos. 163356-57, 10 July 2015. Id at 4

Pilando v. Orodio SEC Case No. 12-10-333 Page 2 of 3 Decision

Whenever, for any cause, there is no person authorized to call a meeting, the Securities and Exchange Commission, upon petition of a stockholder or member, and on a showing of good cause therefore,may issue an order to the petitioning stockholder or member directing him

laws. The petitioning stockholder or member shall preside thereat until at least majority of to call a meeting of the corporation by giving proper notice required by this Code or by the by- the stockholders or members present have chosen one of their member[s] as presiding officer.

powered to call a meeting upon petition of the stockholder or member and upon showing of good As early as Ponce v. Encarnacion, etc. and Gapol, the Court of First Instance (now the SEC) is em- cause, thus:

On the showing of good cause therefore, the court may authorize a stockholder to call a meet- ing and to preside thereat until the majority stockholders representing a majority of the stock present and permitted to be voted shall have chosen one among them to preside it. And this showing of good cause therefor exists when the court is apprised of the fact that the by-laws of the corporation require the calling of a general meeting of the stockholders to elect the board of directors but the call for such meeting has not been done.39 The same jurisprudential rule resonates in Philippine National Construction Corporation v. Pabion,40 where the Court validated the order of the SEC to compel the corporation to conduct a stockholders' meeting in the exercise of its regulatory and administrative powers to imple- ment the Corporation Code: SEC's assumption of jurisdiction over this case is proper, as the controversy involves the elec- tion of PNcc's directors. Petitioner does not really contradict the nature of the question pre sented and agrees that there is an intra-corporate question involved. XXXX Prescinding from the above premises, it necessarily follows that SEC can compel PNCC to hold a stockholders' meeting for the purpose of electing members of the latter's board of directors. XXXX

holders' meeting for election purposes.. As respondents point out, the SEC's action is also justified by its regulatory and administrative powers to implement the Corporation Code, specifically to compel the PNCC to hold a stock-

grants the Commission the power to punish for contempt, both direct and indirect, in accordance with the Contrary to the argument raised by the Respondents in in their Answer,7 the Securities Regulation Code

provisions of and penalties prescribed by the Rules of Court.8

Respondents committed disobedience of the lawful order of the Commission,when it did not hold the annual stockholder's meeting as ordered by the Commission. Respondents did not provide any explanation as to why the meeting was not held. Respondents' also did not appear at the preliminary conference as ordered by the Commission.

judgment is punishable for indirect contempt.9 The penalty for indirect contempt committed against the Commission, which as a tribunal, is of a rank equivalent to the Regional Trial Court, is a fine not exceeding thirty thousand pesos or imprisonment not exceeding six (6) months, or both.10 The Rules of Court provide that a person guilty of disobedience of or resistance to a lawful order, or

SECURITES REGULATION CODE 1 5 ( Rules of Court, rule 71 3 (b) Rules of Court, rule 71 % 7 Orodio Ans.12(a

Page 3 of 3 SEC Case No. 12-10-333 Decision Pilando v. Orodio

Samuel Garcia and all the other Board of Directors or Officers of the Rural Bank of Rizal (K.A.), Inc. on 3 July 2010, are hereby GUILTY of INDIRECT CONTEMPT, and is hereby 0RDERED to pay the fine of thirty thou- WHEREFORE, premises considered, Respondents Nerissa Orodio, Marrietta Jambaro, Efraim Orodio,

sand pesos (Php30,000.00) each.

SO ORDERED Pasay City, Philippines, 10 October 2017.

TERESITA J. HERBOSA

Chairperson

Atmir Haauna Hhe ANTONIETA F. IBE EPHYRO LUIS B. AMATONG Z1mY

Commissioner Commissioner

BIIASJAME Bo EMILI6\B^AQUINO W

Commissioner Commissioner