G.R. No. 101711 October 1, 1993
ROGELIO R. MACAPALAN, petitioner, vs. THE HONORABLE BETHEL KATALBAS-MOSCARDON, Presiding Judge-Designate, RTC of Negros Occidental, Branch 52, and RPB VENTURE CAPITAL CORPORATION, respondents.

FACTS

On June 30, 1987, Mandalagan Development Corporation (MDC), represented by Bacolod Shrimpmate, Inc. (BSI) as attorney-in-fact, mortgaged its Lot No. 1435-A to private respondent RPB Venture Capital Corporation to secure a loan obtained by BSI. Due to BSI’s failure to pay, private respondent foreclosed the mortgage and purchased the land at a public auction on November 15, 1989. On January 23, 1991, petitioner Rogelio R. Macapalan, a member of MDC’s Board of Directors, filed a complaint before the Regional Trial Court (RTC) for annulment of the real estate mortgage and foreclosure sale. He alleged the mortgage was an ultra vires act of MDC, as its amended articles of incorporation did not authorize encumbering its property to secure loans for other persons. Private respondent moved to dismiss on the ground that the trial court lacked jurisdiction, arguing the case fell under the original and exclusive jurisdiction of the Securities and Exchange Commission (SEC) pursuant to Section 5 of Presidential Decree No. 902-A. The RTC agreed and dismissed the complaint, holding the issue involved schemes by MDC’s Board detrimental to stockholders and a controversy arising out of intra-corporate relations. Petitioner’s motion for reconsideration was denied.

ISSUE

Whether or not the trial court correctly applied Section 5, subsections (a) and (b) of Presidential Decree No. 902-A in dismissing Civil Case No. 6341 for lack of jurisdiction.

RULING

No. The trial court erred in dismissing the case. The Supreme Court granted the petition, set aside the RTC’s orders, and directed the trial court to proceed with the trial. The Court held that the case did not fall under the SEC’s original and exclusive jurisdiction. Petitioner’s complaint for annulment of the real estate mortgage and foreclosure sale, filed by a director against another corporation, did not involve any of the relationships enumerated in the Union Glass case as within the SEC’s jurisdiction: (a) between the corporation and the public; (b) between the corporation and its stockholders, partners, members, or officers; (c) between the corporation and the state regarding its franchise; or (d) among the stockholders, partners, or associates themselves. Furthermore, the complaint contained no allegation of fraud or misrepresentation. The nature of the controversy, as determined from the complaint’s allegations, was an ordinary civil litigation beyond the SEC’s specialized expertise. The Court emphasized that while administrative specialization is expedient, it should not deprive regular courts of their power to decide ordinary cases under general laws.