G.R. No. 241905 , March 11, 2020.
CARLOS S. PALANCA IV AND COGNATIO HOLDINGS, INC., PETITIONERS, VS. RCBC SECURITIES, INC., RESPONDENT.

FACTS

RCBC Securities, Inc. (RSI) is a securities brokerage firm. Petitioners Carlos S. Palanca IV and Cognatio Holdings, Inc. were its clients. RSI discovered that its sales agent, Mary Grace Valbuena, was involved in questionable securities trading transactions. RSI terminated Valbuena, and the Philippine Stock Exchange Market Regulation Department (PSE-MRD) imposed a ₱5,000,000.00 penalty on RSI for related violations. RSI filed cases against Valbuena and processed claims of prejudiced clients, but rejected petitioners’ claim as baseless.
Petitioners sent demand letters to RSI and, after rejection, filed separate cases for Specific Performance with Damages against RSI with the Makati RTC, which were dismissed. Petitioners elevated these dismissals to the Supreme Court via petitions for review, which were denied and became final.
Meanwhile, Cognatio filed a complaint with the SEC for revocation or suspension of license against Valbuena and RSI. Subsequently, petitioners sent Requests for Assistance to the PSE, seeking assistance to direct RSI to furnish them with specific documents related to their trading accounts (e.g., confirmation slips, deposit applications, sources of deposits, identity of persons receiving withdrawn monies). The PSE referred the requests to the Capital Markets Integrity Corporation (CMIC).
RSI opposed the requests, arguing they were written complaints filed beyond the six-month reglementary period under CMIC Rules and constituted forum shopping. The CMIC denied the requests, holding they were prescribed written complaints and barred by res judicata due to the prior PSE-MRD ruling. The SEC en banc reversed the CMIC, directing RSI to produce the documents, ruling the requests were not complaints but plain requests for records under CMIC rules, and petitioners were entitled to them due to their brokerage (agency) relationship. The Court of Appeals reversed the SEC, reinstating the CMIC’s denial, essentially agreeing that the requests were prescribed written complaints.

ISSUE

Whether the Requests for Assistance filed by petitioners with the PSE/CMIC are “written complaints” subject to the six-month prescriptive period under the CMIC Rules, or are they simple requests for documents to which petitioners are entitled as clients of RSI.

RULING

The Supreme Court granted the petition, reversed the Court of Appeals Decision, and reinstated the SEC en banc Decision. The Court held that the Requests for Assistance were not “written complaints” seeking an investigation or penalty for violations, but were simple requests for specific documents and information. The allegations of irregularities within the requests were merely to provide factual context. The prescriptive period for written complaints under CMIC rules does not apply. The Court ruled that petitioners, as clients of RSI, are legally entitled to the requested documents based on the fiduciary nature of the broker-client relationship, which is an agency. As principals, they have the right to an account and full disclosure from their agent (RSI) of all material facts regarding the agency. The CMIC and SEC have the authority to order the production of such records. The defense of res judicata was also rejected as the causes of action and reliefs sought in the Requests were different from those in the prior specific performance cases and the PSE-MRD resolution.