A & A CONTINENTAL COMMODITIES PHILIPPINES, INC., PETITIONER, VS. SECURITIES AND EXCHANGE COMMISSION AND ROLANDO G. AGUILA, RESPONDENTS.

In the instant petition for certiorari and prohibition,
petitioner A & A Continental Commodities Philippines, Inc., seeks to annul
and set aside the order dated September 24, 1980, issued by respondent
Securities and Exchange Commission (SEC for brevity) in SEC Case No. 1886 and
to dismiss said case. The impugned
order was promulgated prior to the issuance on February 27, 1991, of Circular
No. 1-91 which mandates elevation of an appeal from a final order or decision
of the Securities and Exchange Commission to the Court of Appeals.

The relevant facts of the case, culled from the record, are as
follows:

Petitioner is a domestic corporation duly organized and existing
under Philippine laws, engaged in the commodities brokerage business. On August 3, 1979, petitioner and private
respondent entered into a contract for the purchase or sale of commodities
(Annex A of Petitioner’s Reply, p. 287, Rollo). On January 21, 1980, private respondent bought, through
petitioner, seven contracts of copper at the following prices: (a) five contracts for US$1.387 per pound
and (b) two contracts for US$1.3840. The margin requirement for the seven contracts was P18,750 per contract
or a total amount of P131,250.00, which amount was earmarked from private
respondent’s cash deposit with petitioner of P306,326.46. On January 23, 1980, petitioner, allegedly
“without valid and justifiable cause, maliciously, arbitrarily, wantonly,
fraudulently, and recklessly” (p. 37, Rollo), ordered private respondent
to increase his margin requirements per contract from P18,750 to P75,000 and
gave private respondent up to 5 P.M. of
the same day within which to deposit with petitioner the amount of P344,771.05. Private respondent requested additional time
within which to raise the amount, but petitioner informed him that it would
immediately sell his seven copper contracts should he fail to deposit the
additional amount by 5 P.M. that same day. Private respondent then requested that should petitioner proceed with
the sale, the same be not effected immediately upon the opening of trading if
prices were low but at a later time. However, petitioner did not accede to the request and sold five
contracts for $1.2150 a pound immediately upon the opening of trading on
January 24, 1980 and the other two at $1.25 a pound at a latter time.

Claiming that he had incurred a loss of P199,646.68 due to the
premature sale of the copper contracts and that he would have made a profit of
P100,000 had the sale been made at a later date, private respondent filed with
the SEC on March 19, 1980 a complaint later docketed as SEC Case No. 1886,
praying that judgment be rendered:

1. Revoking the certificate of registration of
respondent A & A with this Honorable Commission.

2. Ordering respondent to pay petitioner [now
private respondent Aguila] the sum of P299,646.68, plus such interests and
other charges as petitioner Aguila may prove in the course of trial.

3. Ordering respondent A & A [now herein
petitioner] to pay the amount of P1,000,000.00 as moral and exemplary damages.

4. Ordering respondent A & A to pay
attorney’s fees in the amount of P100,000.00, expenses of litigation, and costs
of suit. (p. 42, Rollo)

On April 28, 1980, petitioner filed a motion to dismiss SEC Case
No. 1886 principally on the ground of lack of jurisdiction of the SEC. The motion was, however, denied in an Order
dated September 24, 1980.

Hence, the instant petition where the only issue necessarily is
whether or not the SEC has jurisdiction over SEC Case No. 1886.

Before proceeding to resolve said issue, we have to resolve
initially private respondent’s motion to disqualify petitioner’s counsel. Private respondent asserts that before the filing
of SEC Case No. 1886 the law firm of Santiago, Fornier, Tinga & Associates
handled this case as shown by the demand letter dated January 26, 1980 (Annex A
of private respondent’s Comment, pp. 182-183, Rollo) sent to petitioner wherein
Atty. Andresito X. Fornier of the law firm Santiago, Fornier, Tinga &
Associates on behalf of private respondent, informed petitioner that private
respondent was not confirming the sale of the seven copper contracts and
wherein it was further demanded that petitioner should credit to private
respondent the amount of P111,628.55 or his margin deposit. Petitioner, in its opposition to said
motion, states that Atty. Andresito X. Fornier withdrew from the law firm of
Santiago, Fornier, Tinga and Associates effective January 12, 1980, as
evidenced by the minutes of the meeting of January 12, 1980 (Annex D of
Petitioner’s Reply, p. 296, Rollo). Considering that Atty. Andresito Fornier was no longer a member of the
law firm Santiago, Fornier, Tinga & Associates even before the incidents of
the case at bar transpired, as in fact said law firm was already inexistent at
the time the letter of January 26, 1980 was written, private respondent’s
motion to disqualify petitioner’s counsel should be denied.

We come now to the main issue: the jurisdiction of the SEC over the case.

Poring over the complaint filed by private respondent, we find
that the complaint is praying for two reliefs based on the same set of
facts. One is for the revocation of the
certificate of registration of petitioner; the other is for a sum of money.

On the action to revoke the certificate of registration of
petitioner, there is no doubt that the SEC has jurisdiction over the same. Section 6(L) of Presidential Decree No.
902-A clearly provides that the SEC shall possess the power to suspend or
revoke, after proper notice and hearing, the franchise or certificate of
registration of corporations, partnerships or associations.

On the other aspect of the SEC’s jurisdiction over the action for
a sum of money, we likewise rule that the Commission has the legal competence
to decide said issue.

It is axiomatic that jurisdiction over the subject matter of a
case is conferred by law (Tijam vs. Sibonghanoy, 23 SCRA
29 [1968]) and is determined by the allegations of the complaint, irrespective
of whether or not the plaintiff is entitled to recover upon all or some of the
claims asserted therein (Serrano vs. Munoz (Hi) Motors.
Inc., 21 SCRA 1085 [1967]).

The basic legal provision conferring jurisdiction upon the SEC is
Section 5 of Presidential Decree No. 902-A which this Court applied in Orosa,
Jr. vs. Court of Appeals (193 SCRA 391
[1991]), thusly:

Section 3 of Pres. Decree No. 902-A should also be read in
conjunction with Section 5 of the same law, providing:

“Sec. 5. In addition
to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and decrees, it
shall have original and exclusive jurisdiction to
hear and decide cases involving:

‘a) Devices or schemes employed by or any acts
of the board of directors, business associates, its officers or partners,
amounting to fraud and misrepresentation which may be detrimental to the public
and/or the stockholders, partners, members of associations or organizations
registered with the Commission.'” (Emphasis ours).

Considering that Petitioners’ Complaints sufficiently allege acts
amounting to fraud and misrepresentation committed by Respondent Corporation,
the SEC must be held to retain its original and exclusive jurisdiction over
these five (5) cases notwithstanding the revocation by the Central Bank of
Respondent Corporation’s license or permit to operate as a financing company
and despite the fact that the suits involve collections of sums of money paid
to said corporation, the recovery of which would ordinarily fall within the
jurisdiction of regular Courts. The
fraud committed is detrimental to the interest of the public and, therefore,
encompasses a category of relationship within the SEC jurisdiction.

“Otherwise stated, in order that
the SEC can take cognizance of a case, the controversy must pertain to any of
the following relationships: (a)
between the corporation, partnership or association and the public; (b) between
the corporation, partnership or association and its stockholders, partners,
members or officers; (c) between the corporation, partnership or association
and the state in so far as its franchise, permit or license to operate is
concerned; and (d) among the stockholders, partners or associates
themselves.” (Union Glass & Container Corp. v. SEC, No. 64013, 28
November 1983, 126 SCRA 31, 38; Abejo v. De la Cruz, No. 63558, 19 May 1987,
149 SCRA 654).

(at pp. 396-397.)

The above-quoted ruling was reiterated in the case of Magalad
vs. Premiere Financing Corporation (209 SCRA 260
[1992]), to wit:

Considering that Magalad’s complaint sufficiently alleges acts
amounting to fraud and misrepresentation committed by Premiere, the SEC must be
held to retain its original and exclusive jurisdiction over the case, despite
the fact that the suit involves collection of sums of money paid to said
corporation, the recovery of which would ordinarily fall within the
jurisdiction of regular courts. The
fraud committed is detrimental to the interest of the public and, therefore,
encompasses a category of relationship within the SEC jurisdiction. (at p. 264.)

As earlier alluded to, the complaint filed before the SEC,
insofar as herein pertinent, alleged:

5. On January 23, 1980 respondent A & A,
without valid and justifiable cause, arbitrarily, maliciously, wantonly,
fraudulently, and recklessly ordered petitioner to increase its margin
requirement per contract.

Withal, the complaint alleged fraud on the part of petitioner
which supposedly resulted in monetary losses to private respondent, for which
reason the conclusion, on the basis of the Orosa and Magalad
cases, is that the SEC has original and exclusive jurisdiction over SEC Case
No. 1886.

WHEREFORE, the petition is hereby DENIED. The temporary restraining order issued on
October 29, 1980, is hereby DISSOLVED.

SO ORDERED.

Feliciano, (Chairman), Bidin, Romero, and Vitug, JJ., concur.