GERARDO ARANAS AND FELINA RAVACIO ARANAS, PETITIONERS, VS. HONORABLE COURT OF APPEALS, ILIGAN CAPITOL COLLEGE, SESENIO ROSALES AND LAUREANA ROSALES, RESPONDENTS.

Does the Securities and Exchange Commission (SEC) have
jurisdiction over an intra-corporate dispute which occurred prior to, but
remained outstanding or unfinished after the promulgation of PD 902-A on 11
March 1976?

There is no need for a lengthy exposition of the facts. The pertinent data in the dispositive
portion of the decision rendered by the Regional Trial Court (RTC) of Lanao del
Norte, Branch I, Iligan City* in Civil
Case No. 1276, dated 7 August 1975, will suffice:

“x x x judgment is hereby rendered ordering the herein
defendants jointly and severally, to cause the issuance in favor of the
plaintiffs, the certificate of stock corresponding to the cash investment made
by them in the Iligan Capitol College in the amount of P5,730.00 as of May, 1964
and to deliver in favor of the plaintiffs their unrealized profits and/or
dividends by virtue of this investment from May up to the present.”

On 25 July 1984, herein petitioners (plaintiffs in the court a
quo), having prevailed in their action, filed with said court a motion
to compel respondent Iligan Capitol College to submit all corporate records,
financial state­ments, stock transfer books for the examination of the court a
quo.

The court, as prayed for by petitioners, issued several orders
and writs of execution but private respondents re­fused to obey and comply with
the said orders. On 24 April 1989,
another order and alias writ of execution were issued by the same court;
whereupon, private respondents filed a motion for reconsideration, claiming therein
that the case involves an intra-corporate dispute cognizable by the Securities
and Exchange Commission, pursuant to PD 902-A. An order of 29 June 1989 maintained that the court a quo
has not lost jurisdiction to enforce its final judgment^[1] over
the intra-corporate dispute.

Private respondents resorted to a petition for certiorari
before the Court of Appeals, assailing the court a quo’s
insistence on its jurisdiction over the dispute. Private respondents were sustained in their position by the Court
of Appeals.^[2]

Petitioners are now before this Court on a petition for review on
certiorari. They submit that the
matter, at this stage, is simply an execution of a final judgment rendered by
the court a quo
and that there is no further or
new controversy between a stockholder and the corporation.

There is weight to what petitioners say on the issue of execution
of a final judgment rendered by the trial court at a time when it had
unquestioned jurisdiction over the case. The general rule is that once jurisdiction attaches, it continues, and
yet, under the circumstances of the case, we believe, conformably with the
decision of the Court of Appeals, that execution of the RTC judgment should now
be placed under the supervision and control of the Securities and Exchange
Commission, even if the RTC judgment indeed is now final and executory and can
no longer be modified or altered.

Section 5 of PD 902-A reads:

“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 interest of the public
and/or of the stockholders, partners, members of associations or organizations
registered with the Commission.

b)     
Controversies arising out of intra-corporate or partnership
relations, between and among stock­holders, members, or associates; between any
or all of them and the corporation, partnership or association of which they
are stockholders, members or associates, respectively; and between such corpo­ration,
partnership or association and the state insofar as it concerns their
individual franchise or right to exist as such entity;

x x x”

The evident purpose of the law in investing a specialized
administrative body like the Secu­rities and Exchange Commission with
additional adjudicators powers over intracorporate and kindred disputes is to
promote dispatch arising from expertise enhanced by specialization in the
settlement of the said controversies. On
this premise, it would not really matter whether the acts or events giving rise
to litigation occurred before or after the adoption of Presidential Decree No.
902-A on March 11, 1976.” (Emphasis supplied).^[3]

There is, true
enough, no indication that right after 11 March 1976 when PD 902-A was
promulgated, herein private respondents moved for the transfer of the
proceedings to the SEC, hence, they can be deemed to have acquiesced to the
proceedings before the court a quo and to be bound thereby; however, execution and subsequent
incidents will have to be transferred to the jurisdiction of the Securities and
Exchange Commission. This appears to be
the clear intent of the law, PD 902-A.

The Securities and Exchange Commission is ordered to cause the
execution of the final judgment, dated 7 July 1975, of the RTC of Lanao del
Norte, Branch I, Iligan City in Civil Case No. 1276. This will include, among others, the issuance of certificate of
stock in favor of petitioners, inspection of the books of accounts of
respondent corporation for the purpose of determining whether profits have
indeed been earned by the corporation and whether herein petitioners have been
unjustly deprived of their share therein.

WHEREFORE, the decision appealed from is AFFIRMED. Let this case be remanded to the Securities
and Exchange Commission for disposition in accordance with the pronounce­ments
in this decision. The entire records of
Civil Case No. 1276 are ordered transferred to the SEC.

SO ORDERED.

Narvasa, C.J., (Chairman), Regalado, and Nocon, JJ., concur.

* Judge Mamindiara P. Mangotara,
presiding.

^[1]
Rollo at 42

^[2]
Decision penned by Justice Justo P. Torres and concurred in by Justices
Santiago M. Kapunan and Emeterio C. Cui.

^[3]
Dionisio vs. CFI of South Cotabato, Br. II, G.R. No. 61048, 17 August
1983, 124 SCRA 222