The SEC and the courts are barred from intruding into the business judgments of corporations when the same are made in good faith

The “business judgment rule” simply means that “the SEC and the courts are barred from intruding into business judgments of corporations, when the same are made in good faith.” 

Furthermore, the SEC is not vested by law with any power to interpret contracts and interfere in the determination of the rights between and among a corporation’s stockholders. Neither can the SEC adjudicate on the contractual relations among these same stockholders. 

To stress, the SEC’s only function here was to determine the corporation’s compliance with the formal requirements under Section 38 of Corporation Code. (Metroplex Berhad and Paxell Investment Limited vs. Sinophil Corporation, G.R. No. 208281, June 28, 2021)