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PHILIPPINE STOCK EXCHANGE, INC., petitioner, vs. THE

HONORABLE COURT OF APPEALS, SECURITIES AND

EXCHANGE COMMISSION and PUERTO AZUL LAND,

INC., respondents.

TORRES, JR., J .:

FACTS:

Puerto Azul Land, Inc. (PALI) is a corporation engaged in the real

estate business. PALI was granted permission by the Securities and

Echange !ommission (SE!) to sell its shares to the public in order 

"or PALI to de#elop its properties.

 PALI then as$ed the Philippine Stoc$ Echange (PSE) to list PALI%s

stoc$s&shares to "acilitate echange. 'he PSE oard o" o#ernors

denied PALI%s application on the ground that there were multiple

claims on the assets o" PALI. Apparently, the *arcoses, +ebeccoPanlilio (trustee o" the *arcoses), and some other corporations

were claiming assets i" not ownership o#er PALI.

PALI then wrote a letter to the SE! as$ing the latter to re#iew PSE%s

decision. 'he SE! re#ersed PSE%s decisions and ordered the latter 

to cause the listing o" PALI shares in the Echange.

ISSUE: hether or not it is within the power o" the SE! to re#erse

actions done by the PSE.

HELD: -es. 'he SE! has both urisdiction and authority to loo$ into

the decision o" PSE pursuant to the +e#ised Securities Act and "or 

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the purpose o" ensuring "air administration o" the echange. PSE,

as a corporation itsel" and as a stoc$ echange is subect to SE!%s

 urisdiction, regulation, and control. In order to insure "air dealing o" 

securities and a "air administration o" echanges in the PSE, the

SE! has the authority to loo$ into the rulings issued by the PSE.

'he SE! is the entity with the primary say as to whether or not

securities, including shares o" stoc$ o" a corporation, may be traded

or not in the stoc$ echange.

HOWEVER, in the case at bar, the Supreme !ourt emphasized that

the SE! may only re#erse decisions issued by the PSE i" such aretainted with bad "aith. In this case, there was no showing that PSE

acted with bad "aith when it denied the application o" PALI. ased

on the multiple ad#erse claims against the assets o" PALI, PSE

deemed that granting PALI%s application will only be contrary to the

best interest o" the general public. It was reasonable "or the PSE to

eercise its udgment in the manner it deems appropriate "or its

business identity, as long as no rights are trampled upon, and public

wel"are is sa"eguarded.