Crisostomo vs. Securities and Exchange Commission

The Court held that the SEC en banc did not commit grave abuse of discretion in setting aside a hearing officer's injunction and ordering a corporate reorganization, as the constitutional restrictions on foreign ownership were not violated where the corporate records demonstrated majority Filipino ownership. The governing principle is that a party's filing of multiple petitions raising the same issues in different forums constitutes forum-shopping, warranting dismissal and disciplinary action.

Sixto Crisostomo, a member of the controlling group in UDMC, challenged the validity of a capital infusion by Japanese investors (the Yamada and Enatsu spouses) that gave them an 82.09% subscription interest in UDMC. The investment, approved by Philippine regulatory agencies, saved UDMC from foreclosure. Crisostomo filed cases before the SEC and the Regional Trial Court to annul the investment agreements and prevent a corporate reorganization, alleging violations of constitutional provisions limiting foreign ownership in corporations holding private land and operating educational institutions.

UDMC, originally controlled by the Crisostomo group (minority stockholders), faced foreclosure on a P55 million DBP loan. To avert this, UDMC officers persuaded the Japanese investors to infuse P57 million in capital, acquiring an 82.09% subscription interest. The transaction received approval from the Board of Investments, Central Bank, and SEC. On the eve of a scheduled stockholders' meeting to reorganize the corporation, petitioner Sixto Crisostomo filed suit to annul the agreements and halt the meeting. The SEC Hearing Officer issued a preliminary injunction, but the SEC en banc reversed this, finding no merit in the petitioner's claims and ordering the corporate reorganization to proceed. The petitioner then pursued parallel remedies in the Court of Appeals and the Supreme Court.

• Petitioner maintained that the SEC en banc committed grave abuse of discretion in reversing the Hearing Officer's injunctive orders.
• Petitioner argued that the investment violated Section 7, Article XII of the 1987 Constitution, which restricts the transfer of private lands to corporations at least 60% Filipino-owned, because the Japanese group held 82% of UDMC's shares.
• Petitioner argued that the investment violated Section 4(2), Article XIV of the 1987 Constitution, which requires educational institutions (like UDMC's nursing school) to be at least 60% Filipino-owned.
• Petitioner contended that allowing the Japanese investors to control UDMC would permit them to illegally practice their professions in the Philippines.

• Respondents countered that the SEC en banc had clear authority to review and reverse the Hearing Officer's orders.
• Respondents argued that no constitutional violation occurred because UDMC's application for registration declared 70% Filipino ownership, including the Filipino spouse Edita Enatsu, which was approved by the Central Bank.
• Respondents argued that owning shares in a corporation that operates a hospital does not constitute the practice of a profession.
• Respondents moved to dismiss the petitions and cited the petitioner for forum-shopping, as he had filed multiple actions raising the same issues in different forums.

• Procedural Issues: Whether the petitioner engaged in forum-shopping warranting dismissal of the petitions and disciplinary action.
• Substantive Issues: Whether the SEC en banc committed grave abuse of discretion in vacating the preliminary injunction and ordering a special stockholders' meeting. Whether the foreign investment in UDMC violated the constitutional restrictions on foreign ownership of private land and educational institutions.

• Procedural: The Court found a clear case of forum-shopping. The petitioner had filed a petition for certiorari in the Court of Appeals (CA-G.R. SP No. 17435) challenging the SEC resolution and, without awaiting its final resolution, filed the instant petitions in the Supreme Court raising the same issues. This violated the rule against filing similar petitions in different courts simultaneously. Accordingly, the Court dismissed the petitions on this ground and censured the petitioner and his counsel.
• Substantive: The Court found no grave abuse of discretion by the SEC en banc and no constitutional violation. The authority of the SEC en banc to reverse a hearing officer is elementary. The constitutional challenge failed because the corporate records, as approved by the Central Bank, showed 70% Filipino ownership. The Court held that the ownership of shares in a hospital corporation does not equate to the practice of medicine or nursing.

• Forum-Shopping — The doctrine prohibits a party from filing multiple actions based on the same cause, seeking the same relief, in different forums to increase chances of a favorable judgment or to vex opponents. The Court applied it here because the petitioner simultaneously pursued substantially identical reliefs in the Court of Appeals and the Supreme Court, constituting an abuse of process.

• "Forum-shopping is prohibited by the Interim Rules of Court for it trifles with the courts and abuses their processes."
• "There is forum-shopping whenever as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another."

• Villanueva vs. Adre, G.R. No. 8063, April 27, 1989 — Cited to support the definition of forum-shopping, particularly in the context of litigations commenced in courts while an administrative proceeding is pending.
• E. Razon, Inc. vs. Phil. Port Authority, 101 SCRA 450 — Cited for the principle that forum-shopping trifles with the courts and abuses their processes.
• Marcelo Steel Corp. vs. Court of Appeals, 54 SCRA 89 [1973] — Cited for the rule that a judgment dissolving a preliminary injunction is immediately executory and not stayed by a pending appeal.

• Section 7, Article XII, 1987 Constitution — Cited by petitioner to argue that the transfer of private land to a corporation not meeting the 60% Filipino ownership requirement is prohibited. The Court found it inapplicable based on the approved corporate ownership structure.
• Section 4(2), Article XIV, 1987 Constitution — Cited by petitioner to argue that educational institutions must be at least 60% Filipino-owned. The Court found it inapplicable for the same reason.
• Section 17, Interim Rules of Court — Cited to prohibit the filing of similar special civil action petitions in both the Supreme Court and the Intermediate Appellate Court, and to provide for dismissal and contempt for violations.