383 Phil. 18
PURISIMA, J.:
"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:Petitioner’s motion for reconsideration met the same fate. It was denied.
xxx xxx xxx
b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any and/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;"
"In order to ascertain the nature of the question that is the subject of the controversy, we have to rely on the allegations of the complaint, the truth of which is to be theoretically admitted in considering the motion to dismiss.Silverio, on the other hand, contended that SEC should exercise jurisdiction over the case, pointing out that although dubbed a simple collection case, the case involves other issues arising from intra-corporate controversies, taking into account the pending cases he had filed against petitioner before the SEC to cancel the write-off of Twenty Five Million (P25,000,000.00) Pesos against old accounts, including the loans subject of this petition, and to restore the same in the books of petitioner as paid-in surplus (docketed as SEC Case No. 04262); and to allow him (Silverio) to exercise his option to buy back his shares and obtain control of Pilipinas Bank (docketed as SEC Case No. 03383).
In the present case, we do not find it necessary to resort to the expertise of the SEC. Petitioner’s complaint for annulment of the real estate mortgage and foreclosure sale with preliminary injunction is an ordinary civil litigation, beyond the jurisdiction of the SEC. It is true that the trend is towards vesting administrative bodies like the SEC with the power to adjudicate matters coming under their particular specialization, to insure a more knowledgeable solution of the problems submitted to them. This would also relieve the regular courts of a substantial number of cases that would otherwise swell their already clogged dockets. But as expedient as this policy may be, it should not deprive the courts of justice of their power to decide ordinary cases in accordance with the general laws that do not require any particular expertise or training to interpret and apply. Otherwise, the creeping take-over by the administrative agencies of the judicial power vested in the courts would render the judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution."
"This grant of jurisdiction must be viewed in the light of the nature and function of the SEC under the law. Section 3 of PD No.902-A confers upon the latter ‘absolute jurisdiction, supervision and control over all corporations, partnerships or associations, who are grantees of primary franchise and/or license or permit issued by the government to operate in the Philippines x x x.‘ The principal function of the SEC is the supervision and control over corporations, partnerships and associations with the end in view that investment in these entities may be encouraged and protected, and their activities pursued for the promotion of economic development.There is no question that the present case instituted by petitioner to collect loans amounting to about Four Million (P4,000,000.00) Pesos obtained by Silverio, who seeks to recover his Twenty Five Million Peso-deposit in paid-in surplus which was written off by petitioner, is an intra-corporate controversy or dispute arising from intra-corporate relations.
It is in aid of this office that the adjudicative power of the SEC must be exercised. Thus the law explicitly specified and delimited its jurisdiction to matters intrinsically connected with the regulation of corporations, partnerships and associations and those dealing with the internal affairs of such corporations, partnerships or associations.
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." (cited in Macapalan vs. Katalbas-Moscardon, supra, p. 53)
"The allegations against herein respondents in the amended complaint unquestionably reveal intra-corporate controversies cleverly concealed, although unsuccessfully, by use of civil law terms and phrases. The amended complaint impleads herein respondents who, in their capacity as directors of AFPSLAI, allegedly convened an illegal meeting and voted for the reorganization of management resulting in petitioner’s ouster as corporate officer. While it may be said that the same corporate acts also give rise to civil liability for damages, it does not follow that the case is necessarily taken out of the jurisdiction of the SEC as it may award damages which can be considered consequential in the exercise of its adjudicative powers. Besides, incidental issues that properly fall within the authority of a tribunal may also be considered by it to avoid multiplicity of actions."[8]The Court agrees with the observation by the Court of Appeals that the case of Boman Environmental Dev’t. Corporation vs. Court of Appeals[9] is analogous to petitioner’s cause of action and therefore, applicable here. The said case, which this Court pronounced as falling within the original and exclusive jurisdiction of the SEC, involved an action brought by a corporate director against the corporation, to complete payment of consideration for the purchase of the former’s shares of stock and interests in the corporation. In that case, this Court said:
"This case involves an intra-corporate controversy because the parties are a stockholder and the corporation. As correctly observed by the trial court, the perfection of the agreement to sell Fajilan’s participation and interests in BEDECO and the execution of the promissory note for payment of the price of the sale did not remove the dispute from the coverage of Section 5 (b) of P.D. No. 902, as amended, for both the said agreement (Annex C) and the promissory note (Annex D) arose from intra-corporate relations. Indeed, all the signatories of both documents were stockholders of the corporation at the time of signing the same. It was an intra-corporate transaction, hence, this suit is an intra-corporate controversy.WHEREFORE, the petition is DENIED and the assailed decision of the Court of Appeals in CA-G.R. SP No. 33704 AFFIRMED. No pronouncement as to costs.
xxx xxx xxx
Fajilan’s suit against the corporation to enforce the latter’s promissory note or compel the corporation to pay for his shareholdings is cognizable by the SEC alone which shall determine whether such payment will not constitute a distribution of corporate assets to a stockholder in preference over creditors of the corporation. The SEC has exclusive supervision, control and regulatory jurisdiction to investigate whether the corporation has unrestricted retained earnings to cover the payment for the shares, and whether the purchase is for a legitimate corporate purpose as provided in Sections 41 and 122 of the Corporation Code x x x."[10]