A & A Continental Commodities Philippines, Inc. v. Securities and Exchange Commission
REITERATIONFacts
The Antecedents: Petitioner A & A Continental Commodities Philippines, Inc. (A & A) is a domestic corporation engaged in the commodities brokerage business. Private respondent Rolando G. Aguila entered into a contract with A & A for the purchase or sale of commodities. On January 21, 1980, private respondent bought seven contracts of copper through petitioner. The margin requirement for these contracts was P131,250.00, which was debited from his cash deposit with A & A. On January 23, 1980, A & A allegedly "maliciously, arbitrarily, wantonly, fraudulently, and recklessly" ordered private respondent to increase his margin requirement per contract from P18,750 to P75,000, demanding an additional deposit of P344,771.05 by 5 P.M. the same day. Private respondent requested more time, but A & A refused and threatened to sell his contracts. Private respondent requested that the sale not be effected immediately if prices were low, but A & A did not accede. Consequently, A & A sold five contracts at $1.2150 per pound and the other two at $1.25 per pound on January 24, 1980. Procedural History: Private respondent filed a complaint with the Securities and Exchange Commission (SEC) on March 19, 1980, docketed as SEC Case No. 1886. He prayed for the revocation of A & A's certificate of registration, payment of P299,646.68 in losses plus interest, P1,000,000.00 in moral and exemplary damages, and P100,000.00 in attorney's fees. A & A filed a motion to dismiss on April 28, 1980, primarily on the ground of lack of SEC jurisdiction. The SEC denied this motion in an Order dated September 24, 1980. The Petition: Petitioner A & A Continental Commodities Philippines, Inc. filed the instant petition for certiorari and prohibition, seeking to annul the SEC's September 24, 1980 order and dismiss SEC Case No. 1886. The core issue is whether the SEC has jurisdiction over the case.
Issue(s)
Whether the Securities and Exchange Commission (SEC) has jurisdiction over SEC Case No. 1886. Whether private respondent's motion to disqualify petitioner's counsel should be granted.
Ruling
The petition is DENIED. The temporary restraining order issued on October 29, 1980, is DISSOLVED.
Ratio Decidendi
On the jurisdiction of the SEC: The SEC has original and exclusive jurisdiction over SEC Case No. 1886. The complaint prayed for two reliefs based on the same set of facts: revocation of the certificate of registration and recovery of monetary losses. The SEC clearly has jurisdiction over the action to revoke the certificate of registration under Section 6(L) of Presidential Decree No. 902-A. Regarding the action for a sum of money, the Court ruled that the SEC also has legal competence. Jurisdiction over the subject matter is conferred by law and is determined by the allegations in the complaint, irrespective of the plaintiff's entitlement to recover. Section 5 of Presidential Decree No. 902-A grants the SEC original and exclusive jurisdiction over cases involving devices or schemes employed by corporate officers amounting to fraud and misrepresentation detrimental to the public or stockholders. The complaint in SEC Case No. 1886 sufficiently alleged acts amounting to fraud and misrepresentation by petitioner A & A, which resulted in monetary losses to private respondent. This falls within the categories of relationships over which the SEC has jurisdiction: between the corporation and the public, or between the corporation and its stockholders/members, especially when fraud is involved. The ruling in Orosa, Jr. v. Court of Appeals and Magalad v. Premiere Financing Corporation were applied, holding that the SEC retains jurisdiction even if the suit involves collection of sums of money, provided that fraud detrimental to the public interest is alleged. On the disqualification of counsel: The motion to disqualify petitioner's counsel is denied. The Court found that Atty. Andresito Fornier withdrew from the law firm Santiago, Fornier, Tinga & Associates effective January 12, 1980, which was prior to the incidents of the case and even before the demand letter dated January 26, 1980, was written. Therefore, Atty. Fornier was no longer a member of the firm when it acted on behalf of the private respondent, negating any conflict of interest.
Main Doctrine
The Securities and Exchange Commission (SEC) has original and exclusive jurisdiction over cases involving acts of corporate officers or entities amounting to fraud and misrepresentation detrimental to the public, even if the case also involves claims for sums of money.