G.R. No. 123445 October 6, 1997
BENJAMIN TOLENTINO, petitioner, vs. COURT OF APPEALS, TRUSTCOM FUTURES, INC., STEVEN TANG (alias Tang Chai Tak), ELENA LAO, and JOEL RODRIGUEZ, respondents.

FACTS

On November 14, 1988, petitioner Benjamin Tolentino filed a complaint for “Sum of Money With Application For Issuance Of Writ Of Preliminary Attachment” before the Regional Trial Court (RTC) of Quezon City against private respondents Trustcom Futures, Inc., Steven Tang, Elena Lao, and Joel Rodriguez. The complaint alleged that on February 27, 1989, Tolentino entered into a “Trading Contract and Rules for Commodity Trading” with Trustcom Futures, Inc., represented by Joel Rodriguez, who was designated as his Investment Consultant for trading in the commodity futures market. Tolentino made margin deposits totaling P887,300.00. He alleged that the defendants conspired to commit fraud, misrepresentation, and machinations by engaging in cross-trading through the opening of buying and selling positions opposed to his own, using fictitious names and accounts, and relaxing margin deposit rules to facilitate these transactions. This allegedly caused Tolentino a loss of P827,300.00, while the defendants realized profits. The complaint sought recovery of his investment and damages. Private respondents moved to dismiss the complaint on grounds of lack of jurisdiction by the RTC, citing a pending action before the Securities and Exchange Commission (SEC) involving similar claims. The RTC dismissed the complaint, and the Court of Appeals affirmed the dismissal, holding that the allegations of fraud and schemes detrimental to the public interest placed the case within the exclusive jurisdiction of the SEC under Presidential Decree No. 902-A.

ISSUE

Whether the Regional Trial Court or the Securities and Exchange Commission has jurisdiction over the complaint filed by petitioner Benjamin Tolentino against private respondents for sum of money and damages arising from alleged fraud, misrepresentation, and cross-trading in commodity futures transactions.

RULING

The Supreme Court DENIED the petition, affirming the decision of the Court of Appeals. The Court held that the case falls within the exclusive original jurisdiction of the Securities and Exchange Commission (SEC) under Section 5(a) of Presidential Decree No. 902-A. The complaint, while framed as an action for sum of money, contained allegations that the corporate respondent and its officers employed schemes and devices amounting to fraud and misrepresentation detrimental to the public interest. Following the precedent in Bernardo vs. Court of Appeals, the Court ruled that the nature of the controversy—involving the recovery of an investment in the commodity futures market due to alleged fraudulent activities by a corporation and its officers—and the relationship between the parties (a corporation and a member of the public) squarely place it under SEC jurisdiction. The Court emphasized that jurisdiction is determined by law and the allegations in the complaint, not by the consent or agreement of the parties. Therefore, the RTC correctly dismissed the complaint for lack of jurisdiction.