G.R. Nos. L-58507-08 February 26, 1992
RAMON GIL ABAD and CONSUELO R. ABAD, petitioners, vs. COURT OF FIRST INSTANCE OF PANGASINAN, BRANCH VIII, Presided over by HONORABLE JUDGE MODESTO S. BASCOS, and DIMENSIONAL CONSTRUCTION, TRADE AND DEVELOPMENT CORPORATION, respondents.

FACTS

Petitioners Ramon and Consuelo Abad invested various sums of money with respondent Dimensional Construction, Trade and Development Corporation (DIMCONTRAD), a domestic corporation. The investments were made on different dates, each with a six-month term and a guaranteed monthly profit share of 5%. DIMCONTRAD issued official receipts, instruction slips, and promissory notes for each investment. Upon maturity, DIMCONTRAD failed to return the principal investments and to pay several of the guaranteed monthly profit shares, despite repeated demands. Consequently, the Abads filed separate complaints for sum of money and damages with the Court of First Instance (now RTC) of Pangasinan.
The respondent trial court dismissed both complaints, holding that the Securities and Exchange Commission (SEC), and not the regular courts, had original and exclusive jurisdiction over the cases. The court reasoned that the controversy involved an intra-corporate dispute between investors and a corporation, falling under the SEC’s jurisdiction pursuant to Presidential Decree No. 902-A. The Abads filed a motion for reconsideration, which was denied, prompting this petition for review.

ISSUE

Whether the trial court has jurisdiction over the complaints for sum of money filed by the petitioners against the respondent corporation, or whether jurisdiction properly lies with the Securities and Exchange Commission.

RULING

The Supreme Court ruled that the trial court has jurisdiction. The legal logic is anchored on the nature of the controversy and the delineated jurisdiction of the SEC under P.D. 902-A. The Court emphasized that the SEC’s adjudicative power is limited to matters intrinsically connected with the regulation of corporations and their internal affairs. Specifically, its jurisdiction is confined to controversies in (a) the relationship between the corporation and the public; (b) the relationship between the corporation and its stockholders, partners, members, or officers; (c) the relationship between the corporation and the state regarding its franchise; and (d) the relationship among the stockholders, partners, or associates themselves.
The petitioners’ cause of action is based purely on a contractual obligation—specifically, the promissory notes executed by DIMCONTRAD promising to return the invested sums with profit shares. The action is for collection of a sum of money arising from breach of these contracts. There is no allegation that the petitioners are stockholders, members, or officers of the corporation. The dispute is merely between a corporation and its creditors, which is an ordinary civil action cognizable by regular courts. The claim for damages due to alleged fraudulent acts does not transform the basic contractual nature of the action into an intra-corporate dispute. Therefore, the trial court erred in dismissing the cases for lack of jurisdiction. The Orders were reversed and set aside, and the trial court was directed to hear and decide the cases.