G.R. No. 146979 ; July 27, 2006
HIKOI SUZUKI, RAMON DEL ROSARIO and TAKAYUKI SATO, petitioners, vs. DIANA DE GUZMAN, respondent.

FACTS

Petitioners, as the Board of Directors of Suzuki Beach Hotel, Inc. (SBHI), declared due and demandable the unpaid subscriptions of respondent Diana de Guzman and another stockholder. After they failed to pay, the Board resolved to sell the delinquent shares at a public auction, where petitioner Ramon del Rosario was the winning bidder for de Guzman’s shares. Respondent filed a petition with the Securities and Exchange Commission (SEC) seeking to nullify the auction sale and for the calling of a special stockholders’ meeting. Petitioners moved to dismiss, arguing the SEC lacked jurisdiction as respondent, by virtue of the sale, was no longer a stockholder, making the dispute ordinary and cognizable by regular courts.
During the pendency of the SEC case, the Board issued a second call for payment and, upon respondent’s continued failure, conducted another auction sale with the same result. Respondent filed a supplemental pleading to nullify this second sale. The SEC denied all motions to dismiss, asserting jurisdiction over the intra-corporate dispute. Petitioners then filed a petition for certiorari and prohibition with the Court of Appeals (CA).

ISSUE

Whether the Court of Appeals erred in dismissing the petition for certiorari and in upholding the SEC’s jurisdiction over the case.

RULING

The Supreme Court denied the petition and affirmed the CA. On procedure, the Court found the CA correctly dismissed the petition for certiorari due to procedural defects, including a certification of non-forum shopping signed only by counsel without the required written explanation. The rules mandate strict compliance, and the defects were fatal to the petition’s sufficiency.
On the substantive issue of jurisdiction, the Court upheld the SEC’s jurisdiction. The controversy is intrinsically intra-corporate, arising from the relationship between the corporation and its stockholders and among the stockholders themselves, concerning the validity of the call for payment and the subsequent auction of shares. The fact that the shares were sold at auction does not automatically strip the SEC of jurisdiction. The determination of whether respondent ceased to be a stockholder is precisely a matter that hinges on the validity of the corporate act (the auction sale) itself, which is the core issue of the case. This issue is inseparable from the intra-corporate relations between the parties. Therefore, the dispute falls squarely within the SEC’s jurisdiction under P.D. No. 902-A, as the case involves controversies arising out of intra-corporate relations. The Court emphasized that jurisdiction is determined by the allegations in the complaint and the nature of the issue, which here pertains to internal corporate affairs.