G.R. No. 131889 March 12, 2001
VIRGINIA O. GOCHAN, et al., petitioners, vs. RICHARD G. YOUNG, et al., respondents.

FACTS

The case originated from a complaint filed with the Securities and Exchange Commission (SEC) by the heirs of Alice Gochan, namely her children and her estate, against Felix Gochan & Sons Realty Corporation and other petitioners. The heirs alleged that they were the beneficial owners of 179 shares of stock in the corporation, originally inherited from Alice. Their father, John D. Young Sr., who held the shares in trust, had requested the corporation to transfer and issue the shares in their names in 1979, but the corporation refused, citing a right of first refusal clause in its Articles of Incorporation. After John Sr.’s death, the heirs filed the SEC case in 1994 seeking issuance of the shares, reconveyance, accounting, and damages.
The petitioners moved to dismiss the complaint, arguing that the SEC lacked jurisdiction, that the heirs were not real parties-in-interest as they were not stockholders of record, and that the action was barred by prescription. The SEC hearing officer granted the dismissal, ruling it was not an intra-corporate controversy since the complainants were not registered stockholders. The SEC en banc affirmed. On appeal, the Court of Appeals modified the order, dismissing the complaint only as to the heirs of Alice Gochan but without prejudice to filing in regular courts, while letting the complaint proceed for other co-complainants.

ISSUE

Whether the SEC (and subsequently the regular courts) has jurisdiction over the complaint filed by the heirs of Alice Gochan.

RULING

Yes, the regular courts have jurisdiction. The Supreme Court affirmed the Court of Appeals with modification, ordering the remand of the entire case to the proper Regional Trial Court. The Court clarified that jurisdiction over the subject matter is determined by the allegations in the complaint. The complaint essentially alleged a derivative suit and acts in violation of fiduciary duties by corporate directors/officers, which constitute an intra-corporate controversy. The fact that the heirs were not yet registered stockholders in the corporate books did not bar them from filing the suit, as the allegations showed they were bona fide stockholders claiming beneficial ownership inherited through their parents. Their standing is derived from their status as heirs and beneficial owners, which is sufficient to confer jurisdiction.
Furthermore, the Court noted that with the enactment of Republic Act No. 8799 (The Securities Regulation Code), jurisdiction over intra-corporate disputes was transferred from the SEC to courts of general jurisdiction. Thus, the case should be heard by the proper Regional Trial Court. The Court also ruled that the action was not barred by prescription, as the alleged trust over the shares was an implied trust, which prescribes in ten years, and the filing in 1994 was within the period from the 1979 demand. The order for the cancellation of the notice of lis pendens was also reversed.