allegations in the complaint that vests jurisdiction.

A case in
point is Philippine Woman’s Christian Temperance Union, Inc. vs.
Abiertas House of Friendship, Inc. wherein we held that when the
thrust of a complaint is on the ultra vires act of a corporation, that
is, that the complained act of a corporation is contrary to its
VOL. 356, APRIL 4, 2001 193 declared corporate purposes, the SEC has jurisdiction to entertain
the complaint before it.
Pilipinas Loan Company, Inc. vs. Securities and Exchange
Commission Same; Same; Same; By law, the Securities and Exchange
Commission has absolute jurisdiction, supervision and control
*
over all corporations that are enfranchised to act as corporate
G.R. No. 104720. April 4, 2001.
entities—a violation by a corporation of its franchise is properly
within the jurisdiction of the Securities and Exchange
PILIPINAS LOAN COMPANY, INC., petitioner, vs. HON. Commission.—It must be recalled that the complaint of private
SECURITIES AND EXCHANGE 1
COMMISSION AND respondent alleged that the articles of incorporation of petitioner
FILIPINAS PAWNSHOP, INC., respondents. contained this prohibition: “without, however, engaging in
pawnbroking as defined in PD 114” and despite this restriction,
Corporation Law; Securities and Exchange Commission; petitioner allegedly continued to actually operate and do business
Jurisdiction; Actions; Pleadings and Practice; Basic is the rule as a pawnshop. The complaint thus treats of a violation of
that it is the allegations in the complaint that vests jurisdiction; petitioner’s primary franchise. Section 5 of PD 114, the same law
When the thrust of a complaint is on the ultra vires act of a invoked by petitioner, mandates that a corporation desiring to
corporation, that is, that the complained act of a corporation is engage in the pawnshop business must first register with the
contrary to its declared corporate purposes, the SEC has SEC. Without question, the complaint filed by private respondent
jurisdiction to entertain the complaint before it.—Petitioner against petitioner called upon the SEC to exercise its adjudicatory
conjures a supposed conflict of jurisdiction between the Central and supervisory powers. By law, the SEC has absolute
Bank and the SEC by insisting that it is only the Central Bank jurisdiction, supervision and control over all corporations that are
that has jurisdiction over violations of PD 114. The argument is enfranchised to act as corporate entities. A violation by a
misplaced. Basic is the rule that it is the corporation of its franchise is properly within the jurisdiction of
the SEC.

________________ Same; Same; Same; A corporation has only such powers as are
expressly granted to it by law and by its articles of incorporation,
* THIRD DIVISION. those which may be incidental to such conferred powers, those
1 This case was re-raffled to herein ponente pursuant to this Court’s
reasonably necessary to accomplish its purposes and those which
Resolution in A.M. No. 00-9-03-SC dated February 27, 2001.
may be incident to its existence.—A corporation, under the
Corporation Code, has only such powers as are expressly granted
to it by law and by its articles of incorporation, those which may
194 be incidental to such conferred powers, those reasonably
necessary to accomplish its purposes and those which may be
incident to its existence. In the case at bar, the limit of the powers
of petitioner as a corporation is very clear, it is categorically
194 SUPREME COURT REPORTS ANNOTATED prohibited from “engaging in pawnbroking as defined under PD
114.” Hence, in determining what constitutes pawnbrokerage, the
Pilipinas Loan Company, Inc. vs. Securities and Exchange
relevant law to consider is PD 114. This reference to PD 114 is
Commission
also in line with Article 2123 of the Civil Code that states that: every opportunity to be heard during the conference before the
“Art. 2123. With regard to pawnshops and other establishments, PED wherein the parties were required to file their position
which are engaged in making loans secured by pledges, the papers, and on appeal before the SEC en banc.
special laws and regulations concerning them shall be observed,
and subsidiarily, the provisions of this Title.” PETITION for review on certiorari of a decision of the
Court of Appeals.
195
The facts are stated in the opinion of the Court.
     Martinez and Perez Law Offices for petitioner.
VOL. 356, APRIL 4, 2001 195      Santiago, Arevalo, Tomas and Associates for private
respondents.
Pilipinas Loan Company, Inc. vs. Securities and Exchange
Commission 196

Same; Same; Same; Pawnshops; It is the certificate of

196 SUPREME COURT REPORTS ANNOTATED
incorporation that gives juridical personality to a corporation and
places it within Securities and Exchange Commission jurisdiction, Pilipinas Loan Company, Inc. vs. Securities and Exchange
and this jurisdiction is not affected even if the authority to operate Commission
a certain specialized activity is withdrawn by the appropriate
regulatory body other than the SEC; A declaration by the Central GONZAGA-REYES, J.:
Bank that a corporation violated Presidential Decree No. 114 is
not a condition precedent before the Securities and Exchange Before us is a petition for review on certiorari
2
under Rule
Commission can take cognizance of a complaint against a 45 of the Rules of Court of the Decision of the Court of
corporation for violation of its primary franchise.—Jurisprudence Appeals in CA-G.R. SP No. 25782 entitled “Pilipinas Loan
has laid down the principle that it is the certificate of Company, Inc. vs. Honorable Securities and Exchange
incorporation that gives juridical personality to a corporation and Commission and Filipinas Pawnshop, Inc.” dated October
places it within SEC jurisdiction. The case of Orosa, Jr. vs. Court 31, 1991 and Resolution dated March 19, 1992 which
of Appeals teaches that this jurisdiction of the SEC is not affected denied the motion for reconsideration of herein petitioner
even if the authority to operate a certain specialized activity is Pilipinas Loan Company, Inc. (petitioner).
withdrawn by the appropriate regulatory body other than the Private respondent Filipinas Pawnshop,. Inc. (private
SEC. With more reason that we cannot sustain the submission of respondent) is a duly organized corporation registered with
petitioner that a declaration by the Central Bank that it violated the Securities and Exchange Commission (SEC) on
PD 114 is a condition precedent before the SEC can take February 9, 1959 with its principal place of business
cognizance of the complaint against petitioner. located along Pedro Gil St., Paco, Metro Manila. The
articles of incorporation of private respondent states that
Due Process; Due process is not necessarily tantamount to a
its primary purpose is to extend loans at legal interest on
fullblown trial—its essence is simply the opportunity to be heard or
the security of either personal properties or on the security
as applied to administrative proceedings, an opportunity to
of real properties, and to finance installment sales of motor
explain one’s side or an opportunity to seek a reconsideration of the
vehicles, home appliances and other chattels.
ruling or action taken.—Due process is not necessarily
Petitioner is a lending corporation duly registered with
tantamount to a full-blown trial. The essence of due process is
the SEC on July 27, 1989 with some of its places of
simply the opportunity to be heard or as applied to administrative
business located along Pedro Gil, Sta. Ana, Manila and
proceedings, an opportunity to explain one’s side or an
Onyx St., cor. Augusto Francisco St., San Andres, Paco,
opportunity to seek a reconsideration of the ruling or action
Manila. Based on its articles of incorporation, the primary
taken. The records of this case show that petitioner was accorded
purpose of petitioner is:
‘To act as a lending investor or, otherwise, to engage in the On October 18, 1990, petitioner filed its
practice of lending money or extending loans on the security of Comment/Answer questioning the power of the SEC to take
real or personal, tangible or intangible properties whether as cognizance of the complaint involving (1) a supposed
pledge, real or chattel mortgage or otherwise, x x x without violation of the Pawnshop Regulations Act which is more
however, engaging in pawnbroking as defined under PD 114.” properly within the jurisdiction of the Central Bank; and
(2) the determination of whether a corporate name is
On September 11, 1990, private respondent filed a confusingly similar to another which is within the
complaint against petitioner with the Prosecution and jurisdiction of the regular courts. Petitioner denied that it
Enforcement Department (PED) of the SEC docketed as is engaged in the pawnshop business, alleging that it is a
PED CASE No. 90-0737. The complaint alleged that: (1) lending investor duly registered with the Central Bank.
petitioner, contrary to the restriction set by the On October 18, 1991, private respondent filed its reply
Commission, has been operating and doing business as a to the Comment/Answer.
pawnbroker, pawnshop or “sanglaan” in the same On April 8, 1991, the PED of the SEC issued an Order
neighborhood directing petitioner to amend its articles of incorporation
by changing the word “Pilipinas” in its corporate name, and
________________ to cease and desist from further engaging in the business of
pawnshop or “sanglaan.”
2 Per Associate Justice Celso L. Magsino, concurred in by Associate
On August 13, 1991, the SEC en banc rendered a
Justices Artemon D. Luna and Jainal D. Rasul, Special Seventh Division.
Decision affirming with modification the aforementioned
197 Order. The Decision ordered petitioner to (1) amend its
articles of incorporation by deleting the word “pledge” in its
primary purpose and the word “Pilipinas” as part of its
VOL. 356, APRIL 4, 2001 197 corporate name and substituting another word in lieu
Pilipinas Loan Company, Inc. vs. Securities and Exchange thereof within fifteen (15) days from receipt of the decision;
Commission and (2) to cease and desist from further engaging in
business as a “pawnshop” or “pawnbroker or sanglaan” as
where private respondent has had its own pawnshop for 30 defined in Presidential
years in violation of its primary purpose and without the 198
imprimatur of the Central Bank to engage in the pawnshop
business thereby causing unjust and unfair competition
with private respondent; and (2) the business name of 198 SUPREME COURT REPORTS ANNOTATED
petitioner, “PILIPINAS” Loan, bears similarity in spelling Pilipinas Loan Company, Inc. vs. Securities and Exchange
and phonetics with the corporate name of private Commission
respondent, “FILIPINAS” Pawnshop, creating constant
confusion in the minds of the public and the customers of Decree No. 114, otherwise known as the Pawnshop
private respondent. In the same complaint, private Regulation Act, until the proper license shall have been
respondent urged the SEC to: (1) order petitioner to change secured from the Central Bank of the Philippines.
its business name, Pilipinas Loan, and cease from using it Aggrieved, petitioner filed a petition for review before
in the near future; (2) order Pilipinas Loan to cease and the Court of Appeals docketed as CA G.R. SP No. 25782.
desist from engaging in the business of pawnbroking as On October 31, 1991 the Court of Appeals rendered a
defined under PD No. 114; and (3) impose upon the Decision affirming with modification the decision of the
director, officers, employees or persons responsible such SEC. The dispositive portion of the now assailed decision
penalties as may be proper under the law. reads:
“WHEREFORE, premises considered, the decision appealed from While petitioner concedes that the SEC has jurisdiction to
is hereby modified, setting aside that portion ordering petitioner determine whether the condition or restriction in the
to amend its articles of incorporation by deleting the word articles of incorporation of a corporation has been violated,
“pledge” in its primary purposes and the word “Pilipinas” as part petitioner disputes the authority of the SEC to determine
of its corporate name. However, petitioner Pilipinas Loan Co., whether a registered entity is violating PD 114. Petitioner
Inc., its directors, officers, agents or other persons acting in its maintains that PD 114 vests this authority solely in the
behalf are forthwith ordered to CEASE AND DESIST from Central Bank.
further engaging in business as a pawnshop or “pawnbroker” or In upholding the jurisdiction of the SEC, the Court of
“sanglaan” as defined in Presidential Decree No. 114, otherwise Appeals ruled that there is nothing in PD 114 that grants
known as the Pawnshop Regulation Act until the proper license exclusively to the Central Bank the authority to determine
shall have been secured from the Central Bank 3
of the Philippines. if there has been a violation of said decree. Petitioner
In all other respects, the decision is affirmed.” insists that this interpretation is erroneous on the ground
that it runs counter to the time-honored maxim of expressio
On March 19, 1992, the Court of Appeals issued a unius est exclusio alterius. The express and specific
Resolution denying the motion for reconsideration filed by mention of the Central Bank in PD 114 allegedly implies
petitioner. the exclusion of other governmental agencies from making
Hence, this petition for review anchored on these a determination of violations of the provisions of said
grounds: decree. In support of its argument, petitioner cites Section
17 of PD 114 that provides:
“1. Respondent Court of Appeals gravely erred in not
holding that the determination by the Central Bank “Section 17. Grant of authority to the Central Bank.—The Central
of alleged violation of PD No. 114 is a condition Bank is hereby authorized (a) to issue rules and regulations to
precedent to the exercise by respondent Securities implement the provisions contained therein; (b) to require from
and Exchange Commission of its regulatory power pawnshops reports of condition and such other reports necessary
over petitioner. to determine compliance with the provisions of this Decree; (c) to
2. Respondent Court of Appeals gravely erred in not exercise visitorial powers whenever teemed necessary; (d) to
ruling that the finding by respondent SEC is not impose such administrative sanctions including the imposition of
supported by substantial evidence and that fines for violations of this Decree and regulations issued by the
petitioner was denied of its right to due process. Central Bank in pursuance thereto.”
3. Respondent Court of Appeals erred in holding that4
Petitioner points out that in the enforcement of PD 114, the
the activities of petitioner constitute pawnbroking.”
Central Bank is possessed with investigatory or
inquisitorial powers which include power to inspect, or to
_______________ secure, or to require the disclosure of information by means
of accounts, records, reports, statements, testimony of
3 Rollo, p. 47.
witnesses, production of documents, etc. Allegedly, it is
4 Ibid., pp. 18-19.
only after the Central Bank has made a determination of
199 whether petitioner is engaged in pawnbroking that the
SEC can exercise its regulatory powers over petitioner.
Petitioner thus insists that the jurisdiction of the SEC is
VOL. 356, APRIL 4, 2001 199 limited to matters intrinsically connected with the
Pilipinas Loan Company, Inc. vs. Securities and Exchange regulation of corporations, partnerships and associations
Commission and those dealing with the internal affairs of such entities.
The SEC allegedly cannot arrogate unto itself the power to
 200 _______________

5 FLORENZ D. REGALADO, REMEDIAL LAW COMPENDIUM VOL.

200 SUPREME COURT REPORTS ANNOTATED I, 7th REV. ED., p. 9.
Pilipinas Loan Company, Inc. vs. Securities and Exchange 6 292 SCRA 785 (1998).
Commission 7 See Section 3 of PD No. 902-A.
8 Corporation Code, Sec. 45.

look into violations of PD 114 when such power rests solely 201
with the Central Bank.
The petition is without merit.
Petitioner conjures a supposed conflict of jurisdiction VOL. 356, APRIL 4, 2001 201
between the Central Bank and the SEC by insisting that it Pilipinas Loan Company, Inc. vs. Securities and Exchange
is only the Central Bank that has jurisdiction over Commission
violations of PD 114. The argument is misplaced. Basic is
the rule that it is5
the allegations in the complaint that those reasonably necessary to accomplish its9 purposes and
vests jurisdiction. A case in point is Philippine Woman’s those which may be incident to its existence. In the case at
Christian Temperance
6
Union, Inc. vs. Abiertas House of bar, the limit of the powers of petitioner as a corporation is
Friendship, Inc. wherein we held that when the thrust of a very clear, it is categorically prohibited from “engaging in
complaint is on the ultra vires act of a corporation, that is, pawnbroking as defined under PD 114.” Hence, in
that the complained act of a corporation is contrary to its determining what constitutes pawnbrokerage, the relevant
declared corporate purposes, the SEC has jurisdiction to law to consider is PD 114. This reference to PD 114 is also
entertain the complaint before it. in line with Article 2123 of the Civil Code that states that:
It must be recalled that the complaint of private
respondent alleged that the articles of incorporation of “Art. 2123. With regard to pawnshops and other establishments,
petitioner contained this prohibition: “without, however, which are engaged in making loans secured by pledges, the
engaging in pawnbroking as defined in PD 114” and despite special laws and regulations concerning them shall be observed,
this restriction, petitioner allegedly continued to actually and subsidiarily, the provisions of this Title.”
operate and do business as a pawnshop. The complaint
thus treats of a violation of petitioner’s primary franchise. Indispensable therefore to the determination of whether or
Section 5 of PD 114, the same law invoked by petitioner, not petitioner had violated its articles of incorporation, was
mandates that a corporation desiring to engage in the an inquiry by the SEC if petitioner was holding out itself to
pawnshop business must first register with the SEC. the public as a pawnshop. It must be stressed that the
Without question, the complaint filed by private determination of whether petitioner violated PD 114 was
respondent against petitioner called upon the SEC to merely incidental to the regulatory powers of the SEC, to
exercise its adjudicatory and supervisory powers. By law, see to it that a corporation does not go beyond the powers
the SEC has absolute jurisdiction, supervision and control granted to it by its articles of incorporation.
over all corporations that are enfranchised to act as Jurisprudence has laid down the principle that it is the
7
corporate entities. A violation by a corporation of its certificate of incorporation that gives juridical personality
10

franchise is properly within the jurisdiction of the SEC. to a corporation and places it within SEC 11
jurisdiction. The
A corporation, under the Corporation Code, has only case of Orosa, Jr. vs. Court of Appeals teaches that this
such powers as are expressly granted to it by law and by its jurisdiction of the SEC is not affected even if the authority
8
articles of incorporation, those which may be incidental to to operate a certain specialized activity is withdrawn by the
such conferred powers, appropriate regulatory body other than the SEC. With
more reason that we cannot sustain the submission of
petitioner that a declaration by the Central Bank that it the corporation, partnership or association and the state in so far
violated PD 114 is a condition precedent before the SEC as its franchise, permit or license to operate is concerned; and
12
(d)
can take cognizance of the complaint against petitioner. among the stockholders, partners or associates themselves.”
Aside from the supervision and control powers granted
by Section 3 of PD 902-A to the SEC, Section 5 thereof We agree with the Court of Appeals that petitioner cannot
provides that: invoke the jurisdiction of the Central Bank in view of its
own avowal that it is not a pawnshop and neither is it
engaged in the business as a pawnshop. The Court of
_______________
Appeals correctly ruled that:
9 Ibid., Sec. 2.
“It must be noted that upon close scrutiny, PD No. 114 provides
10 Orosa vs. Court of Appeals, 193 SCRA 391 (1991), p. 396.
that the supervisory powers of the Central Bank extends merely
11 Ibid.
to pawnshops registered with it in accordance with Sec. 6 of the
202 same law. In connection with this, we take judicial notice of the
Rules and Regulations for Pawnshops (CB Circular No. 374)
enacted pursuant to the authority given to the Central Bank to
202 SUPREME COURT REPORTS ANNOTATED issue rules and regulations to implement the provisions of PD
Pilipinas Loan Company, Inc. vs. Securities and Exchange 114, where it provides the following:
Commission
_______________
“Sec. 5. In addition to the regulatory and adjudicative functions of
12 Ibid.,p.397.
the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it as 203
expressly granted under existing laws and decrees, it shall have
original and exclusive jurisdiction to hear and decide cases
involving: VOL. 356, APRIL 4, 2001 203
Pilipinas Loan Company, Inc. vs. Securities and Exchange
‘a) Devices and schemes employed by or any acts of the board of directors,
Commission
business associates, its officers or partners, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public
and/or of the stockholders, partners, members of associations or ‘Sec. 11. Powers of Pawnshop.—A duly organized and licensed pawnshop

organizations registered with the commission.’ ” (Emphasis ours) has, in general, the power to engage in the business of lending money on
the security of personal property within the framework and limitations of
Clearly, the recital in the complaint of private respondent PD No. 114 and this circular, subject to the regulatory and supervisory
that petitioner is engaged in the pawnshop business when powers of the Central Bank.
it is not authorized to do so by its articles of incorporation ‘Sec. 36. Examination, Inspection, or Investigation.—The official of the
amounts to fraud, detrimental not only to the corporation Central Bank in charge of non-bank financial intermediary and his duly
but also to the stockholders and the public. The designated representatives are hereby authorized to conduct an
relationship involved in this controversy is a category of examination, inspection, or investigation of books, records, business
relationship over which the SEC has exclusive jurisdiction, affairs, administration, and financial condition of any pawnshop,
thus: whenever said official deems it necessary for the effective
implementation of Presidential Decree No. 114 and of this Circular. x x x’
“(a) between the corporation, partnership or association and the
public; (b) between the corporation, partnership or association Furthermore, under CB Circular No. 381 providing for the
and its stockholders, partners, members or officers; (c) between Procedure For Processing Complaints Against Pawnshops, it is
provided that: photographs attached by private respondent to its position
paper. The photographs in question show that petitioner
‘The Monetary Board, Central Bank of the Philippines, pursuant to its
used a billboard with the inscription “SANGLAAN” in front
Chapter and Presidential Decree No. 114, entitled, The Pawnshop
of its office. Petitioner however claims that it was not
Regulation Act, has promulgated the following procedures for processing
furnished a copy of the position paper of private respondent
complaints against pawnshops;
and that these photographs were not presented during the
1. Complaints against pawnshops must be filed with the Office of hearing before the PED. Except for said photographs,
Non Bank Financial Intermediaries (ONBFI), Central Bank of petitioner points out that private respondent did not
the Philippines, in writing and signed under oath by the adduce any other evidence to substantiate its claim that
complainant’; petitioner is engaged in pawnshop activities. Petitioner
asserts that the photographs cannot be considered as
The foregoing must have also impelled Director Olaso of the substantial evidence.
Central Bank to send private respondent a reply letter (Exh. C) We are not persuaded. Due process is not necessarily
apprising it that only over pawnshops, and not lending tantamount to a full-blown trial. The essence of due process
institutions, does the Central Bank exercise supervisory powers. is simply the opportunity to be heard or as applied to
Considering that petitioner is admittedly not a registered administrative proceedings, an opportunity to explain one’s
pawnshop operator, any complaint filed against it is not side or an opportunity 14
to seek a reconsideration of the
13
cognizable by the Central Bank.” (Emphasis supplied) ruling or action taken. The records of this case show that
petitioner was accorded every opportunity to be heard
The mere fact that a portion of the SEC decision stated during the conference before the PED wherein the parties
that copies of the same be furnished the Central Bank does were required to file their position papers, and on appeal
not necessarily mean that the SEC recognized the before the SEC en banc.
jurisdiction of the Central Bank over PD 114 violations. Contrary to the claim of petitioner, the Court of Appeals
Obviously, the SEC had already assumed jurisdiction over found that the evidence presented by private respondent
the case and had in fact disposed of it, the transmission of a was duly appended to the position paper submitted to the
copy of said decision to the Central Bank was PED and to the SEC en banc. Assuming arguendo that
petitioner was not furnished a copy of the photographs, it is
_______________ now too late in the day for petitioner to raise this matter
before us when it could have submitted this issue before
13 Rollo, p. 43. the hearing officer and the SEC en banc. The records fail to
204
support petitioner’s insistence that it raised this issue
before the SEC. In its appeal before the SEC, petitioner
merely harped on the fact that in ruling for private
204 SUPREME COURT REPORTS ANNOTATED respondent, the hearing officer
Pilipinas Loan Company, Inc. vs. Securities and Exchange
Commission ________________

14 Villareal vs. Court of Appeals, 219 SCRA 293 (1993), p. 301.

mainly to apprise the latter of the disposition of the case so
that it may accordingly act on it. 205
Petitioner bewails the alleged violation of substantive
due process when the SEC rendered the assailed decision
based on evidence which petitioner claims it did not VOL. 356, APRIL 4, 2001 205
receive. The SEC allegedly reached the conclusion that Pilipinas Loan Company, Inc. vs. Securities and Exchange
petitioner is engaged in pawnshop activities based on the Commission
 _______________

relied only on the photographs without mentioning that 15 Ibid., p. 300.

petitioner did not receive a copy of said photographs.
Plainly then, the SEC could not have addressed this issue 206
for the simple reason that it was not duly informed of this
matter, a situation which was petitioner’s own making.
206 SUPREME COURT REPORTS ANNOTATED
We reject petitioner’s claim that the SEC relied solely on
the photographs in reaching the conclusion that petitioner Pilipinas Loan Company, Inc. vs. Securities and Exchange
is engaged in pawnshop activities. Aside from the Commission
questioned photographs, other evidence such as affidavits
of the past customers of petitioner and the supposed the supposed “promissory note” evidencing a customer’s
“promissory note” between petitioner and its customers transaction with petitioner, is more of a pawnticket than what it
were also submitted to the SEC. The SEC and the Court of represents. We hereby quote with approval the argument
Appeals were one in ruling that the so-called “promissory advanced by private respondent on this point.
note” was more of a pawn ticket than an instrument of “1. The contents of the ‘pawnshop tickets’ issued by
indebtedness. We see no cogent reason to set aside the respondent PILIPINAS LOAN as “promissory notes” are
factual findings of the SEC, also upheld by the Court of basically pawnshop tickets which as provided in the
Appeals, based on the settled rule that the findings of fact Pawnshop Regulation Act, PD No. 114 are the following:
of the SEC must be respected as long as15 they are supported
by substantial evidence, as in this case. a) Name and residence of the pawner;
The Court of Appeals appreciated the entire evidence,
b) Date when loan is granted;
consisting of the affidavits, the promissory note and
photographs, in this manner: c) Amount of the principal loan;
d) Interest rate in percentage;
“A careful examination and analysis of the records of this case e) Period of maturity;
indicates that petitioner has indeed engaged in the business of
f) Description of the pawn;
pawnbroking. It is not argued that petitioner do (sic) lend money
on the security of personal property. What must be observed g) Signature of the pawnbroker or his authorized
though are the very prominent words “SANGLAAN” found on its representative;
billboards (Exhs. F and G) which cannot but give the impression h) Signature of the pawner; and
to the public that its establishment is more of a pawnshop than a i) Other terms and conditions.
lending institution servicing different kinds of loans. The word
“SANGLAAN,” especially in big cities, have come to be associated 2. The only document required to be executed by the
with pawnshops and it denotes the idea of a place where one customers (pawners) of respondent Pilipinas Loan is the
presents personal property for a loan, which is the exclusive aforesaid “Promissory Loan,” which is the only document
domain of a pawnshop. Thus, the use of such word by petitioner also commonly required in pawnshops or “sanglaan,”
was more calculated to attract customers who will acquire loans whereas genuine lending investors require a set of
on the security of personal properties alone. That this activity is documents x x x.
in fact undertaken can be readily deduced from the graphic and 3. The respondent Pilipinas Loan always takes possession of
unmistakable setup (Exhs. J and K) of petitioner’s place of the “pawn” or articles pawned to secure the loan; whereas,
business which is a picture of a typical pawnshop where a person if it is truly operating as a Lending Investor it does not
transacts through small glass openings labeled ‘sangla’ and have to take possession of the article pledged or
‘tubos.’ Moreover, mortgaged because the borrower’s capacity to pay is
 established, normally with 16
a co-maker.
x x x      x x x      x x x”

Thus, the totality of the evidence substantially establishes

the conclusion that petitioner contravened its articles of
incorporation when it held itself out to the public as a
pawnshop.
WHEREFORE, in view of the foregoing, the petition is
DENIED. Costs against petitioner.

________________

16 Rollo, p. 46.

207

VOL. 356, APRIL 4, 2001 207

Societe Des Produits Nestlé, S.A. vs. Court of Appeals

SO ORDERED.

          Melo (Chairman), Vitug, Panganiban and

Sandoval-Gutierrez, JJ., concur.

Petition denied.

Notes.—It is already a well-settled jurisprudential

concept that jurisdiction over the subject matter is
conferred by law. (Union Bank of the Philippines vs. Court
of Appeals, 290 SCRA 198 [1998])
Not every conflict between a corporation and its
stockholders involves corporate matters that only the SEC
can resolve. (Ramoso vs. Court of Appeals, 347 SCRA 463
[2000])

——o0o——

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