Saavedra v. Securities & Exchange Commission
REITERATIONFacts
The Antecedents: Private respondents sold all their stocks, rights, and interests in Philippine Inc. to petitioners for P12 million, payable in installments, evidenced by a Memorandum of Agreement and a Deed of Assignment. The Memorandum of Agreement stipulated automatic rescission upon failure to pay any installment. Petitioners failed to pay the last installment, prompting private respondents to rescind the sale via an "Instrument, Rescission of Memorandum of Agreement." Procedural History: Private respondents filed a case with the Securities and Exchange Commission (SEC) seeking to declare the rescission valid and to enjoin petitioners from disposing of company assets. The SEC issued a Temporary Restraining Order (TRO) on November 23, 1987. Petitioners filed a Motion to Dismiss, alleging lack of SEC jurisdiction, which was denied by the SEC in an order dated December 11, 1987. The Petition: Petitioners sought the reversal of the SEC orders dated November 23, 1987, and December 11, 1987, and prayed for a prohibition against the SEC from proceeding with the case.
Issue(s)
Whether the Securities and Exchange Commission (SEC) has jurisdiction over the dispute involving the rescission of a sale of corporate stocks and interests, and whether this dispute constitutes an intra-corporate controversy.
Ruling
The petition is dismissed. The Securities and Exchange Commission has jurisdiction over the case.
Ratio Decidendi
On the issue of SEC jurisdiction and whether the dispute constitutes an intra-corporate controversy: The Court affirmed the SEC's jurisdiction, holding that the dispute is an intra-corporate controversy. The controversy arose between principal stockholders concerning the refusal of the petitioners (defendants) to fully comply with their contractual obligations regarding the sale of corporate shares. This involves a dispute over the right to unpaid assignment of shares and the validity of the acquisition of such shares, which directly pertains to who has the right to remain and act as owners-stockholders of the corporation. The Court emphasized that pursuant to Presidential Decree No. 902-A, as amended, particularly Section 5(b) thereof, the SEC possesses original and exclusive jurisdiction over controversies arising out of intra-corporate or partnership relations between and among stockholders, members, or associates, and between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates. The Court reiterated the definition of an intra-corporate controversy as one that arises between a stockholder and the corporation, without any distinction, qualification, or exemption. The Court cited Abejo vs. de la Cruz and Philex Mining Corporation vs. Reyes to underscore that the provision is broad and encompasses all kinds of disputes between stockholders and corporations. The present case clearly falls within this definition as it concerns the rights and obligations of parties who were principal stockholders in relation to the sale of their shares and the subsequent rescission thereof, directly impacting their status as owners-stockholders of the corporation. The Court also noted the trend of referring specialized disputes to administrative agencies with special competence, such as the SEC, for efficient resolution of technical and intricate matters of fact, citing Pambujan Sur United Mine Workers vs. Samar Mining Co. Inc. and the pronouncements of Chief Justice Claudio Teehankee in Abejo vs. de la Cruz regarding the indispensable need for specialized administrative boards in handling such matters.
Main Doctrine
The Securities and Exchange Commission (SEC) has original and exclusive jurisdiction over intra-corporate disputes, including controversies arising from the sale of stocks and interests in a corporation, as provided under Section 5(b) of PD No. 902-A, as amended.