G.R. No. 142924. December 5, 2001.
TEODORO B. VESAGAS and WILFRED D. ASIS, petitioners, vs. THE HONORABLE COURT OF APPEALS and DELFINO RANIEL and HELENDA RANIEL, respondents.

FACTS

Respondent spouses Delfino and Helenda Raniel, members of the Luz Villaga Tennis Club, Inc., filed a complaint with the Securities and Exchange Commission (SEC) against petitioners Teodoro Vesagas and Wilfred Asis, who claimed to be the club’s president and vice-president/legal counsel, respectively. The complaint alleged that petitioners summarily expelled the respondents from the club without due process and in violation of its by-laws. Respondents sought to annul their expulsion, nullify certain amendments to the club’s by-laws, and obtain injunctive relief.
Petitioners moved to dismiss the SEC case, arguing the SEC lacked jurisdiction. They contended the club was not, in practice, a corporation, having been surreptitiously registered by the respondents, and had ceased to be a corporate body. The SEC Hearing Officer denied the motion, a ruling affirmed by the SEC En Banc. The Court of Appeals subsequently dismissed petitioners’ certiorari petition. Petitioners elevated the case to the Supreme Court, reiterating the jurisdictional challenge and additionally questioning the SEC’s contempt powers.

ISSUE

The primary issue is whether the SEC had jurisdiction over the complaint for the annulment of the respondents’ expulsion from the club.

RULING

The Supreme Court denied the petition, upholding the SEC’s jurisdiction. The Court ruled that the club was a duly registered corporation, as explicitly found by the SEC based on its issued certificate of incorporation. This factual finding by the specialized administrative agency is accorded great weight. Furthermore, petitioners were bound by their own judicial admissions in prior pleadings where they treated the club as a corporation, including a board resolution to “dissolve the corporate structure” filed with the SEC. An intra-corporate controversy, such as a dispute between a corporation and its members regarding membership rights, was within the SEC’s jurisdiction under the then-governing law, P.D. 902-A.
The Court also found the ancillary issue on contempt powers to be without merit, as the petitioners were not the addressees of the subpoenas they sought to challenge. Conformably with the recent enactment of the Securities Regulation Code (R.A. 8799), which transferred jurisdiction over such cases to regular courts, the Supreme Court ordered the referral of the case to the appropriate Regional Trial Court designated as a special commercial court.