GR 120730; (October, 1996) (Digest)
G.R. No. 120730 October 28, 1996
RAMON J. BERNARDO, SR., and RAMON XAVIER C. BERNARDO, JR., petitioners, vs. COURT OF APPEALS and MASTER COMMODITIES FUTURES, INC., respondents.
FACTS
Petitioners Ramon J. Bernardo, Sr. and his minor son, Ramon Xavier C. Bernardo, Jr., entered into a commodity futures trading agreement with respondent Master Commodities Futures, Inc. (MASTER). They deposited a total of P100,000.00 as margin. The petitioners alleged that MASTER, through its agents, executed unauthorized purchase and sale orders in violation of their specific instructions, and fraudulently induced the minor to sign blank trading instructions. They filed a complaint in the Regional Trial Court (RTC) seeking the annulment of the trading documents and the recovery of their deposit with damages.
MASTER moved to dismiss the complaint for lack of jurisdiction, contending that the case involved intra-corporate matters falling under the exclusive original jurisdiction of the Securities and Exchange Commission (SEC). The RTC granted the motion to dismiss, a decision affirmed by the Court of Appeals. The appellate court held that the controversy, arising from a commodity futures trading contract with a corporation, involved a relationship between a corporation and the public within the regulatory purview of the SEC.
ISSUE
Whether the Court of Appeals erred in affirming the dismissal of the complaint for lack of jurisdiction, holding that the SEC, not the RTC, has exclusive original jurisdiction over the case.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The Court ruled that jurisdiction is determined by the allegations in the complaint and the nature of the relief sought. The petitioners’ amended complaint essentially alleged that MASTER, a corporation engaged in commodity futures trading, committed fraudulent acts in the execution of trading contracts, resulting in the loss of their investment. This controversy pertains to the relationship between a corporation (MASTER) and members of the public (the Bernardos) involving the corporation’s dealings in securities and futures contracts.
Under Presidential Decree No. 902-A, the SEC possessed exclusive original jurisdiction over controversies arising out of intra-corporate relations, which included those “between the corporation, partnership, or association and the public.” The Court reiterated the doctrine that for the SEC to have jurisdiction, the controversy must pertain to specific relationships, including that between a corporation and the public. Since the case involved allegations of fraud and violation of trading rules by a corporation against its clients, it fell squarely within the SEC’s jurisdiction at the time of filing. The RTC, therefore, correctly dismissed the case for lack of jurisdiction over its subject matter.