G.R. No. L-57936. September 28, 1984. DMRC ENTERPRISES, petitioner, vs. ESTE DEL SOL MOUNTAIN RESERVE, INC., respondent.
FACTS:

Petitioner DMRC Enterprises, a partnership, entered into a lease agreement with respondent Este del Sol Mountain Reserve, Inc., a corporation, for heavy equipment. The contract stipulated that rentals would be paid partly in cash and partly through the investment of 30% of the collections in the purchase of respondent’s shares of stock at a specified market value. Petitioner performed its obligations, and statements of account were sent, reflecting a total obligation of P122,207.31, with a portion payable in shares.
Respondent failed to pay its obligations despite demands. Consequently, petitioner filed a complaint for collection of a sum of money and delivery of personal property (the shares) before the Court of First Instance of Rizal. Respondent moved to dismiss, contending that the Securities and Exchange Commission (SEC) had exclusive jurisdiction under Presidential Decree No. 902-A. The trial court granted the motion to dismiss, prompting this petition.

ISSUE

Whether the Regional Trial Court (then Court of First Instance) or the Securities and Exchange Commission has jurisdiction over the complaint for collection of money and specific performance of a contractual obligation to issue shares of stock.

RULING

The Supreme Court ruled in favor of the petitioner and held that the regular courts have jurisdiction. Jurisdiction is determined by the allegations in the complaint. The complaint essentially alleged a breach of a contract of lease, where the consideration included a monetary component and an obligation to issue shares. It was primarily an action for collection of a sum of money and specific performance arising from an ordinary contract.
The Court clarified that the case did not involve an intra-corporate controversy as defined under P.D. 902-A. For the SEC to have jurisdiction under the decree, the controversy must arise from intra-corporate or partnership relations. Here, the petitioner was not yet a stockholder of the respondent corporation, as no shares had been issued or transferred. The dispute necessitated a prior determination of the parties’ rights and obligations under the basic lease contract—a function within the competence of regular courts. Only after such judicial determination establishing entitlement to the shares could any subsequent corporate dispute regarding those shares potentially fall under SEC jurisdiction.
The Court distinguished the cited case of PAIC Securities v. SEC, as that involved stock transactions between a stockbroker and its client, which directly pertained to the regulatory functions of the SEC. The instant case, being fundamentally a contractual money claim, was correctly within the jurisdiction of the regular courts. The order of dismissal was reversed and set aside.