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320 SCRA 188 (1999)
Ernesto Pabion and Lavella Ramiro claiming to be stock holders of Philippine National Construction
Corporation (PNCC) filed with the Securities and Exchange Commission (SEC) a verified petition alleging
that since 1982 (for 12 years) there has been no stock holders meeting to elect Board of Directors (BOD).
This enables the incumbent directors to hold their position beyond 1 year, which is violative of PNCC’s
by-laws as well as of the corporation code.
The respondents prayed to SEC to order PNCC to call and hold a meeting for election of new BODs and
PNCC, through its answer, contends that it is a Government owned and Controlled Corporation (GOCC)
based on A.O 59 as issued by then President, Cory Aquino. That the BODs do not hold office by virtue of
election but through appointment by the president of the Philippines as provided in Art.IV Sec. 16(1);
that if prayer will be granted, it will be in contravention of A.O 59 and will interfere the power of the
President to control and appoint officers and BODs of GOCC; that due to the preceding reasons, they are
not required to hold a general meeting but the general manager shall submit an annual report to the
President of the Philippines.
SEC ruled in favor of Pabion, ordering that a stock holder’s meeting shall be held.
SEC EN BANC- the commission ruled that PNCC, having incorporated under the corporation code is
subject to hold a stock holder’s meeting for selecting BOD.
CA- affirmed and ruled that though majority of PNCC is owned by the government financial institution, it
retained its charter as a private corporation.
ISSUE : whether PNCC is not a GOCC, hence should hold a stock holder’s meeting.
SC: YES, the President of the Philippines does not determine whether a corporation is GOCC or not, it is
the law, the Administrative Code. As regard SEC ruling on the merits, general rule is not cast in stone, it
can be resolved based on the records. The records show that PNCC is organized under the corporation
code. Hence, SEC has has the original and exclusive jurisdiction over the subject matter.
NB: Corporations organized under the corporation code are under the jurisdiction of SEC.