Bañez v. Dimensional Construction Trade and Development Corporation
REITERATIONFacts
The Antecedents: Petitioners filed a complaint against Dimensional Construction Trade and Development Corporation (private respondent) for the collection of sums of money due under various promissory notes issued by the corporation. The corporation was served summons and complaint but failed to file a responsive pleading. Procedural History: Petitioners moved to have the private respondent declared in default, which the trial court granted on October 14, 1981. The court set a date for the reception of plaintiffs' evidence, which was submitted ex-parte on November 25, 1981. Before judgment, the defendant corporation filed an omnibus motion to annul proceedings, lift attachments, and dismiss the case, contending that the Securities and Exchange Commission (SEC) had exclusive jurisdiction under Section 5(a) of Presidential Decree No. 902-A due to alleged fraud and misrepresentation detrimental to the public and stockholders. Petitioners opposed, arguing the corporation lost its right to be heard after the default order. The respondent court issued an order dated February 12, 1982, dismissing the case and setting aside previous orders, holding that the SEC had jurisdiction. The Petition: Petitioners sought a review of the dismissal order, arguing that the respondent court committed grave abuse of discretion.
Issue(s)
Whether the respondent court committed grave abuse of discretion in dismissing the petitioners' complaint, considering the stated cause of action and allegations. Whether the Securities and Exchange Commission has exclusive jurisdiction over the subject matter of the case, specifically regarding the nature of the sums of money and the presence of intra-corporate relations.
Ruling
The questioned order of the court below dated February 12, 1982, dismissing petitioners' complaint in Civil Case No. U-3569 is hereby reversed and set aside. The respondent court is hereby directed to take cognizance of the proceedings that transpired in the aforestated case and render Judgment based on the evidence adduced therein by the herein petitioners. Costs against the private respondents.
Ratio Decidendi
On the issue of grave abuse of discretion: The Supreme Court found that the respondent court committed a grave abuse of discretion in dismissing the petitioners' complaint. The complaint clearly stated a cause of action for the collection of sums of money due under matured promissory notes. The Court emphasized that the sums received by the private respondent were in the nature of investments to be returned upon maturity of the notes. The Court also considered the practical aspect, stating it would be a useless exercise to refer the case, pending for over five years, to the SEC when the respondent had not filed an answer or asserted a meritorious defense. The efforts of the private respondent to promote unwarranted delay were not to be allowed to succeed. On the issue of SEC jurisdiction: There were no allegations of any device or scheme employed by the private respondent amounting to fraud and misrepresentation, which are the grounds for SEC jurisdiction under PD 902-A. The Court noted the paradox that it was the defendant corporation, despite the absence of such allegations, that insinuated the existence of fraud and misrepresentation. Since the money did not constitute payment for subscription of shares, the petitioners did not become members of the corporation, and therefore, the case did not involve intra-corporate or partnership relations.
Main Doctrine
A case for the collection of sums of money due under matured promissory notes, without allegations of fraud or misrepresentation, falls within the exclusive jurisdiction of the Court of First Instance and not the Securities and Exchange Commission, even if the defendant corporation attempts to invoke PD 902-A to negate a default order.