GR 136159; (September, 1999) (Digest)
G.R. No. 136159 September 1, 1999
MACRINA S. SAURA, AMELITA S. SAURA, ROMEO S. SAURA, and VILLA GOVERNOR FORBES, INC., petitioners, vs. RAMON G. SAURA, JR., CARMENCITA S. MILLAN, respondents.
FACTS
The parties are children of the late Ramon E. Saura, Sr. Petitioners include his third wife, Macrina S. Saura, and their children Amelita and Romeo, along with Villa Governor Forbes, Inc. (VGFI). Respondents are his legitimate children from prior marriages, Ramon G. Saura, Jr. and Carmencita S. Millan. In 1979, respondents executed a deed of exchange, transferring two parcels of land they owned to VGFI in exchange for shares of stock in the corporation. The deed was registered, and titles were issued to VGFI. In 1986, respondents filed a complaint with the Securities and Exchange Commission (SEC) against their father, Macrina, Amelita, and Romeo for annulment of subscription and recovery of corporate assets and funds (SEC Case No. 2968). While this SEC case was pending, petitioners, without respondents’ knowledge, sold the disputed real property to Sandalwood Realty Corporation in 1995. In response, respondents filed a civil case with the Regional Trial Court (RTC) of Manila for annulment of sale, declaration of nullity of the deed of exchange, recovery of possession, cancellation of title, accounting, and damages. Petitioners moved to dismiss the RTC case, arguing, among other grounds, that the SEC had exclusive jurisdiction. The RTC denied the motion to dismiss, and the Court of Appeals upheld the RTC’s jurisdiction, ruling that while the deed of exchange was intra-corporate, the sale to Sandalwood, a third party with no intra-corporate relationship, was beyond the SEC’s adjudicative power.
ISSUE
Whether the Regional Trial Court or the Securities and Exchange Commission has jurisdiction over the civil case for annulment of the sale of the real property to Sandalwood Realty Corporation.
RULING
The Supreme Court ruled that the SEC has jurisdiction over the main issue of the validity of the deed of exchange, as it is an intra-corporate dispute. However, the civil case for annulment of the sale to Sandalwood, a third party, falls within the jurisdiction of the Regional Trial Court. The Court held that the validity of the deed of exchange is a prejudicial question that must first be resolved by the SEC, as it directly affects the title of VGFI and its subsequent capacity to sell the property to Sandalwood. Therefore, the proceedings in the RTC case are suspended pending the final outcome of the SEC case. The Court of Appeals decision was modified accordingly, and the SEC was directed to proceed with the hearing of its case with dispatch.