ChanRobles™ Virtual Law Library | chanrobles.com™  
Main Index Law Library Philippine Laws, Statutes & Codes Latest Legal Updates Philippine Legal Resources Significant Philippine Legal Resources Worldwide Legal Resources Philippine Supreme Court Decisions United States Jurisprudence
Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
Chan Robles Virtual Law Library
 









 

 
UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
October-1996 Jurisprudence                 

  • Adm. Matter MTJ-93-850 October 2, 1996 - ROBERTO CARPIO v. RODOLFO R. DE GUZMAN, ET AL.

  • G.R. No. 116236 October 2, 1996 - VICTORIAS MILLING CO., INC. v. NLRC, ET AL.

  • G.R. No. 116347 October 3, 1996 - NATIVIDAD PONDOC v. NLRC, ET AL.

  • G.R. No. 118091 October 3, 1996 - PEOPLE OF THE PHIL. v. WILFREDO VIERNES, ET AL.

  • G.R. No. 120894 October 3, 1996 - PEOPLE OF THE PHIL. v. MORENO BAYANI

  • G.R. No. 122668 October 3, 1996 - JESSIE DE LEON v. PEOPLE OF THE PHIL.

  • G.R. No. 94548 October 4, 1996 - PEOPLE OF THE PHIL. v. GERARDO COGONON

  • G.R. No. 106722 October 4, 1996 - JOSEMARIA G. ESTRADA v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 108936 October 4, 1996 - SOL LAGUIO, ET AL. v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 117323 October 4, 1996 - PEOPLE OF THE PHIL. v. AGUSTIN DIAZ

  • G.R. No. 117514 October 4, 1996 - MT. CARMEL COLLEGE, ET AL. v. NLRC, ET AL.

  • G.R. No. 119007 October 4, 1996 - PEOPLE OF THE PHIL. v. ROMULO G. SORIA

  • G.R. No. 119290 October 4, 1996 - PEOPLE OF THE PHIL. v. ROBERTO PIASIDAD

  • G.R. No. 90655 October 7, 1996 - DANIEL V. ZARATE, JR. v. NORMA C. OLEGARIO, ET AL.

  • G.R. No. 103577 October 7, 1996 - ROMULO A. CORONEL, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 102713 October 9, 1996 - EDWARD LITTON v. COURT OF APPEALS, ET AL.

  • G.R. No. 117950 October 9, 1996 - PEOPLE OF THE PHIL. v. ARADAM DE MANUEL

  • G.R. No. 119417 October 9, 1996 - PEOPLE OF THE PHIL. v. OMAR CLETO VARONA, JR.

  • G.R. No. 116172 October 10, 1996 - SAN MIGUEL FOODS, INC.-CEBU v. BIENVENlDO E. LAGUESMA, ET AL.

  • Adm. Matter No. P-96-1227 October 11, 1996 - RENATO L. LIRIO v. ARTURO A. RAMOS

  • G.R. No. 104624 October 11, 1996 - SAN PEDRO HOSPITAL OF DIGOS v. SECRETARY OF LABOR, ET AL.

  • G.R. No. 108919 October 11, 1996 - PEOPLE OF THE PHIL. v. EDGAR S. CORDERO

  • G.R. No. 89075 October 15, 1996 - PEOPLE OF THE PHIL. v. ROBERTO GEROLAGA, ET AL.

  • G.R. No. 108433 October 15, 1996 - WALLEM MARITIME SERVICES, INC., ET AL. v. NLRC, ET AL.

  • G.R. No. 118320 October 15, 1996 - PEOPLE OF THE PHIL. v. RODOLFO E. CABODOC

  • G.R. No. 119014 October 15, 1996 - PEOPLE OF THE PHIL. v. JOJO P. PEREZ, ET AL.

  • G.R. No. 79543 October 16, 1996 - JOSE D. FILOTEO, JR. v. SANDIGANBAYAN, ET AL.

  • G.R. No. 111401 October 17, 1996 - ERIBERTO G. VALENCIA, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 120385 October 17, 1996 - REPUBLIC OF THE PHIL. v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 120961 October 17, 1996 - DISTILLERIA WASHINGTON, INC. v. COURT OF APPEALS, ET AL.

  • G.R. No. 121574 October 17, 1996 - METRO TRANSIT ORGANIZATION, INC. v. NLRC, ET AL.

  • G.R. No. 107741 October 18, 1996 - FRANCISCO BERNARTE, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 109834 October 18, 1996 - CECILE SAN JUAN DITCHING, ET AL., v. COURT OF APPEALS, ET AL.

  • G.R. No. 110007 October 18, 1996 - HOLY CROSS OF DAVAO COLLEGE, INC. v. JEROME JOAQUIN, ET AL.

  • G.R. No. 120008 October 18, 1996 - PHIL. ADVERTISING COUNSELORS, INC., ET AL. v. NLRC, ET AL.

  • Adm. Matter No. MTJ- 95-1051 October 21, 1996 - EMERITO M. AGCAOILI v. BRICCIO A. AQUINO

  • G.R. No. 106427 October 21, 1996 - INTER-ASIA SERVICES CORP. (INT’L.) v. COURT OF APPEALS, ET AL.

  • G.R. No. 108461 October 21, 1996 - PHIL. INTERNATIONAL TRADING CORP., ET AL. v. ZOSIMO Z. ANGELES, ET AL.

  • G.R. No. 116013 October 21, 1996 - ANANIAS SOCO, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 105961 October 22, 1996 - PEOPLE OF THE PHIL. v. PACIFICO SUMAOY

  • G.R. No. 113926 October 23, 1996 - SECURITY BANK AND TRUST CO. v. RTC-MAKATI, BR. 61, ET AL.

  • G.R. No. 97935 October 23, 1996 - PEOPLE OF THE PHIL. v. JOEL T. ALIPOSA, ET AL.

  • G.R. No. 113926 October 23, 1996 - SECURITY BANK AND TRUST CO. v. REGIONAL TRIAL COURT-MAKATI, BR. 61, ET AL.

  • G.R. No. 98310 October 24, 1996 - MATUGUINA INTEGRATED WOOD PRODUCTS, INC. v. COURT OF APPEALS, ET AL.

  • G.R. No. 106817 October 24, 1996 - PEOPLE OF THE PHIL. v. JULIAN RAPANUT, ET AL.

  • G.R. No. 114129 October 24, 1996 - MANILA ELECTRIC COMPANY v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 118347 October 24, 1996 - VICENTE LIM, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. Nos. 101213-14 October 28, 1996 - PEOPLE OF THE PHIL. v. HENRY APILO

  • G.R. No. 112148 October 28, 1996 - PEOPLE OF THE PHIL. v. NUMERIANO JUBILAG

  • G.R. No. 115953 October 28, 1996 - GENOVEVA LIGOT SEMPIO, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 116175 October 28, 1996 - PEDRO V. SOLIS v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 120506 October 28, 1996 - PHILIPPINE AIRLINES v. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

  • G.R. No. 120730 October 28, 1996 - RAMON J. BERNARDO, SR., ET AL. v. COURT OF APPEALS, ET AL.

  • Adm. Matter No. P-93-956 October 30, 1996 - OFFICE OF THE COURT ADMINISTRATOR v. ARTURO A. ALAGABAN, ET AL.

  • G.R. No. 102772 October 30, 1996 - PEOPLE OF THE PHIL. v. ROGELIO C. DEOPANTE

  • G.R. No. 107968 October 30, 1996 - ELIAS S. CIPRIANO, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 110296 October 30, 1996 - MID-PASIG LAND DEVELOPMENT CORP. v. SANDIGANBAYAN, ET AL.

  • G.R. No. 113116 October 30, 1996 - PEOPLE OF THE PHIL. v. RONALD DE VERA

  • G.R. No. 121506 October 30, 1996 - MACTAN CEBU INT’L. AIRPORT AUTHORITY v. COURT OF APPEALS, ET AL.

  • G.R. No. 121519 October 30, 1996 - PEOPLE OF THE PHIL. v. VICENTE TY, ET AL.

  • G.R. No. 122256 October 30, 1996 - REPUBLIC OF THE PHIL., ET AL. v. COURT OF APPEALS. ET AL.

  • G.R. No. 123643 October 30, 1996 - PHILIPPINE NATIONAL BANK v. COURT OF APPEALS, ET AL.

  •  





     
     

    G.R. No. 120730   October 28, 1996 - RAMON J. BERNARDO, SR., ET AL. v. COURT OF APPEALS, ET AL.

     
    PHILIPPINE SUPREME COURT DECISIONS

    THIRD DIVISION

    [G.R. No. 120730. October 28, 1996.]

    RAMON J. BERNARDO, SR., and RAMON XAVIER C. BERNARDO, JR., Petitioners, v. COURT OF APPEALS and MASTER COMMODITIES FUTURES, INC., Respondents.


    D E C I S I O N


    DAVIDE, JR., J.:


    The issue in this case is whether respondent Court of Appeals committed reversible error in its decision 1 of 29 December 1994 in CA-G.R. CV No. 34168, affirming the decision 2 of 22 February 1991 of Branch 58 of the Regional Trial Court of Makati which dismissed Civil Case No. 88-1644 for lack of jurisdiction over the subject matter, it being vested in the Securities and Exchange Commission (SEC).

    The original complaint 3 in Civil Case No. 88-1644 was filed on 12 August 1988 by petitioner Ramon J. Bernardo, Sr., in his capacity "as the natural guardian of minor XAVIER C. BERNARDO, JR." against private respondent Master Commodities Futures, Inc. On 28 December 1988, an amended complaint 4 was filed impleading Ramon Xavier C. Bernardo, Jr., as party plaintiff and V.R. Bautista and Gloria Cadiente de Pedro as additional party defendants. The following material facts were alleged in the amended complaint:chanrob1es virtual 1aw library

    2. That, on May 16, 1988, Ramon Bernardo, Sr. and minor Ramon C. Bernardo, Jr. with the assistance of his natural father Ramon J. Bernardo, Sr. entered into a trading commodity agreement, captioned by defendant as Rules for Commodity Trading & Customer’s Agreement with the defendant, whereby plaintiff minor and his father made initial deposit[s] of P 60,000.00 in cash and P40,000.00 in check, or the total margin deposit of P100,000.00 as security for all commodities bought or sold according to the market, brand, delivery month and quantity of commodity, collectively referred to as Trading Contracts, and for the purchase and/or sale of commodity futures, in accordance with the terms and conditions of said agreement, a photocopy of said agreement is attached herewith as Annex "A", while the margin deposits are attached as Annexes "B" and "C" hereof;

    3. That the margin deposits in the amount of 100,000 which came into the possession of the defendant and allegedly used by it in the purchased [sic] of soybeans through purchase and sale orders without instructions from the plaintiff, Ramon Bernardo, Sr., knowingly fully well that the latter gave oral instructions not to purchase and sell commodities without his approval, and to execute one transaction only, in violation of par. 6 of the Rules for Commodity Trading and Customer’s Agreement which requires clear instruction[s] from the customer before a [sic] purchase or sell orders are made;

    4. That after the execution of the said agreement (Annex "A" hereof) and the payment of the margin deposits in the amount of 100,000 which came from Ramon Bernardo, Sr., defendants through insidious machinations required the minor, Ramon Xavier Bernardo, Jr. to sign blank instructions of sale and purchase, without the knowledge, intervention, or approval of the plaintiff, Ramon Bernardo, Sr., the natural guardian of [the] minor, Ramon Bernardo, Jr., knowing fully well that the minor Bernardo, Jr. has no legal capacity to enter into a contract without the assistance of the father, Ramon Bernardo, Sr., and aggravated by the fact that plaintiff, Ramon Bernardo, Sr., gave very clear verbal instructions to the defendant not to execute sale or purchase orders without his approval; furthermore, the purchase or sell orders signed by Ramon Xavier Bernardo are voidable considering that he is a minor, that the acts committed by the defendants in securing the blank signatures of Ramon Bernardo, Jr., without the assistance of his father, Bernardo, Sr. were made to insure the monetary benefit and advantage of the defendants to the prejudice of the plaintiffs.

    5. That a certain V.R. Bautista, an alleged authorized agent of the defendant, without any authority from the plaintiff, Ramon Bernardo, Sr., signed the Instruction of Purchase annex "E", Instructions of Sale annexes "G", "I", thus fraudulently depriving the plaintiffs the amount of 100,000, thus paving way for the alleged transactions wherein according to the defendants, the plaintiffs allegedly lost their money;

    6. That the defendant knowing fully well that Ramon Bernardo, Jr. is a minor and had no capacity to contract, through insidious machinations induced and required him to sign Instructions of Purchase, annexes "D", "F", Instructions of Sale, annex "H", inspite of the clear instructions of the father that purchase and sale orders will have to be approved by him, thereby taking advantage of the minority and inexperience of the plaintiff, Ramon Bernardo, Jr.; furthermore, the plaintiff, Ramon Bernardo, Sr. informed the defendant beforehand that the defendant is a minor, and this is the reason that he signed the commodity agreement, and yet defendant in bad faith still required the minor to sign the Instructions of Purchase and Instructions of Sale;

    7. That the defendant, Gloria Cadiente de Pedro was the one who received the Margin Deposit in the amount of 100,000, as shown by the margin receipts no. 0322, 032, which the plaintiffs up to now did not know the reason why it was lost, and it is the duty of defendant de Pedro to account on [sic] where the money went, and if she is unable to do so to return the same to the plaintiffs;

    8. That the plaintiff, Ramon Bernardo, Sr. as owner of the money in his personal capacity, and as a guardian of Ramon Bernardo, Jr. is entitled to the return of the amount 100,000, the total margin deposits made by the minor Bernardo to the defendant after fraudulent inducements, and exploitation of his minority, plus damages;

    9. That defendants are guilty of fraudulent schemes, machinations, imaginary transactions or other similar deceits to the prejudice of Ramon Bernardo, Sr. and minor Ramon Bernardo, Jr., resulting to [sic] mental anguish and serious anxiety on the part of the plaintiffs, who are fully convinced that they were defrauded of their money given to defendant Master Investments, hence, defendants should be adjudged to pay plaintiffs . . .

    The petitioners as plaintiffs therein then prayed for a judgment: (a) declaring null and void the Instructions of Sale and purchases signed by minor Ramon Xavier C. Bernardo, Jr., and V.R. Bautista and the commodity agreement signed by Ramon Xavier C. Bernardo, Jr.; and, (b) ordering the defendants to pay the plaintiffs (1) P100,000.00 representing the total margin deposits made by the minor Bernardo, Jr., (2) P200,000.00, from each of the defendants, as exemplary damages, (3) P200,000.00 from each of the defendants, as moral damages, and (4) a sum equivalent to 25% of the total amount due as attorney’s fees, plus the costs of the suit.

    In its answer, 5 defendant (private respondent) Master Commodities Futures, Inc. (hereinafter MASTER) denied the material allegations in the amended complaint, especially the claim that Ramon Xavier C. Bernardo, Jr., was a minor, since the Rules of Commodity Trading and Customer’s Agreement which both father and son signed, they represented that they were both of legal age. Further, it raised the following defenses:chanrob1es virtual 1aw library

    7. This Honorable Court has no jurisdiction over the subject matter;

    8. The complaints states no cause of action;

    9. Plaintiff has not complied with the legal requirements before it can sue as an alleged "natural guardian" of his son;

    10. Plaintiff and son are in estoppel and barred by laches, and their claims have been waived, abandoned or otherwise extinguished. 6

    and set up counterclaims for damages and attorney’s fees.

    In their separate answers, 7 defendants V.R. Bautista and Gloria Cadiente de Pedro practically reiterated the answer and defenses of MASTER.

    Issues having been joined, the trial court conducted a pre-trial conference. Thereafter, trial on the merits ensued with the petitioners testifying on their behalf and calling defendant V.R. Bautista as a hostile witness. They offered documentary exhibits consisting of the Commodity Agreement (Exhibit "A"); Instruction to Purchase dated 17 May 1988 (Exhibit "B"); Instruction of Sale dated 23 May 1988 (Exhibit "C"); Instruction of Sale dated 25 May 1988 (Exhibit "D"); Instruction of Sale dated 23 May 1988 (Exhibit "E"); Instruction of Purchase dated 2 June 1988 (Exhibit "F"); Margin Receipt No. 0323 (Exhibit "G"); Margin Receipt No. 0322 (Exhibit "G-1"); Letter of Demand (Exhibit "H"); Notice of Additional Margin (Exhibit "I"); and the Birth Certificate of Ramon Xavier C. Bernardo, Jr. (Exhibit "J") which was offered to prove that he was a minor at the time he signed the assailed transactions. 8 While the defendants presented Ms. Jocelyn A. Lim, Teresita Briones, Alfredo Albao, and George Chua as their witness, 9 with Briones identifying several documentary exhibits (Exhibits "3" to "21," inclusive). 10

    After the conclusion of the trial, the parties submitted their respective memoranda as required. In their Statement of the Case in their Memorandum, the petitioners expounded on their allegations of fraud and fraudulent inducements, misrepresentations, and deceptions allegedly committed by MASTER, as follows:chanrob1es virtual 1aw library

    This is a case of a minor, fraudulently induced by the defendant Master’s Commodities to invest in commodities futures. Deception was employed. The minor was made to believe, that once he invest in commodities futures, he will surely make a big profit. The explanation was made in very technical manner. Statistics were shown. A market chart was shown. All these instruments were designed to convince the minor that there was no way that he could lose his money.

    The minor was fraudulently convinced. He convinced his father, Ramon Bernardo, Sr. To give him the money. His father was in serious doubt about the investment. The minor insisted, that it became an enigma for the father whether to give in to the wishes of the son. The father talked to the representatives of the defendant, Master Commodities. They also deceived him by the same explanation that they gave to the son. They made it appear that the investment will surely make money.

    Since the minor could not sign the contract, the defendants induced the father to sign it, to validate whether infirmity the agreement had with respect to the acts of the minor. To give in to the wishes of his son, the father agreed to sign the agreement, on the condition that there should only be one transaction, and that the purchase and sale orders be cleared with him.

    After the agreement was signed, that father was no longer ask to sign the purchase and sale orders. Inspite of defendant Master’s knowledge that Ramon Bernardo, Jr. Was a minor, it fraudulently asked him to sign the subsequent purchase and sale orders. It avoided the father. It was easier for the defendant Masters to deceive the minor son than the father. The subsequent orders were either signed by the minor, Ramon Bernardo, Jr. Or V.R. Bautista, an officer of the defendant Masters. All these orders were illegal, because they were not authorized by Ramon Bernardo, Sr.

    The plaintiffs after the foregoing misrepresentations, invested money. It bought soybeans futures, because the indication was that the price was going up. It was the minor’s consent that was obtained. Just four days later, the price went down. The market went against the defendants Masters judgment. Plaintiffs immediately lost money, contrary to expectations. They were advised to short sell allegedly to cut losses. This was based on the assumption that the price will go down. But again, the defendant committed another fraudulent inducement. The market went up, against the advise of the defendant Masters.

    It was deception after deception. When the market was going up, the plaintiff minor was advise to sell. The market went against the advise. When minor was advised to short sell, the market went up. Even the market average went against the advise. When the advise to sell was made, there was no chance for the plaintiff to recover. There were misrepresentations as to the true situation of the market. There were fraudulent deceptions. These were not simple errors. These were clear tortious and fraudulent acts.

    The plaintiffs were literally trapped. The moment they gave their money, the lost control of it. It was the defendant Master’s that decided on what to do with money. The money transfer was legalized by the agreement. But after the money transfer, it was the defendant Master’s that decided the faith of the margin deposit. The Father was not consulted anymore. All of these fraudulent acts were justified under a highly technical and one sided contact, whose provisions are even contrary to law. No ordinary layman could fully understand its provisions, especially if fraudulent misrepresentations were made.

    The defendant Masters alleged that it bought soybeans. But it does not know where the soybeans were? Defendant Masters don’t no even know from show it bought the soybeans? It said that it was in the warehouse, but it does not even know where the warehouse was located. The most logical conclusion is that there really a transaction? The evidence did not show that the soybeans and the seller really existed. Where did the money go? Definitely in the hands of the defendant Masters, but as to how it was spent, that is where the fraud lies. 11

    In its decision 12 dated 22 February 1991, the trial court dismissed the case for want of jurisdiction:chanrob1es virtual 1aw library

    It is apparent from plaintiffs complaint specifically paragraph 9 thereof, that plaintiffs accuse defendants, among others of employing fraudulent schemes, machinations and other acts similar thereto which accusation is within the coverage of Sec. 5 of Presidential Decree No. 902-A the pertinent portion of which reads as follows:chanrob1es virtual 1aw library

    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 original and exclusive jurisdiction to hear and decide cases involving:chanrob1es virtual 1aw library

    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 stockholder, partners, members of associations or organizations registered with the Commission. 13

    On appeal, the Court of Appeals (CA-G.R. CV No. 34168) affirmed 14 the trial court and held:chanrob1es virtual 1aw library

    Plaintiff-appellant’s claim that the fraud committed by defendant-appellee in the instant case is the fraud under Arts. 1330, 1338, and/or 1339 of the Civil Code and not those alluded to in Sec. 5a of P.D. 902-A has no merit. The "fraudulent schemes, machinations, imaginary transactions or other deceits" alleged in the instant case was committed by the defendant-appellee corporation and the alleged victim, although only Ramon Bernardo, Jr. in this case, could be anyone among the public who transact or transacted similar business or transaction with said corporation. The plaintiff-appellant himself was the one who used the terms "fraudulent schemes, machinations, imaginary transactions or other deceits" in his complaint. For that matter, plaintiff-appellant’s allegation that "minor Ramon C. Bernardo, Jr. . . . with the assistance of his natural father Ramon J. Bernardo entered into a trading commodity agreement, captioned by defendant as Rules for Commodity Trading & Customer’s Agreement with the defendant" (par. 2, Complaint) could only mean or imply that anyone, among the public, interested may just see or contact defendant-appellee or its representative and make an investment and he or she is a prospective if not yet sure and actual victim. This, in fact, is the gist of the following claim/arguments submitted by plaintiff-appellant:chanrob1es virtual 1aw library

    x       x       x


    It must be well emphasized that the defendant-appellee is a corporation engaged in the trading commodities. The plaintiffs-appellants entered into a contract "a trading agreement" with said defendant-appellee, wherein they parted with their money in the nature of investment. They, plaintiffs-appellants expected to receive returns or profits from the money they invested. Unfortunately, they were the victims of the fraud and misrepresentation by the defendant-appellee, as they contended. It is precisely to check machinations like this that the Securities and Exchange Commission will come in to the picture.

    The grant of jurisdiction to the SEC must be viewed in the light of the nature and function of the SEC under the law. Section 3 of Presidential Decree 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."cralaw virtua1aw library

    The principal function of the SEC is the supervision and control over corporations, partnerships and associations with the end in view that investments in these entities maybe encouraged and protected, and their activities pursued for the promotion of economic development. (Sales v. Securities and Exchange Commission, G.R. 54330, 13 January 1988).

    Their motion for reconsideration 15 having been denied by the Court of Appeals in its resolution of 16 June 1995, 16 the petitioners filed this instant petition and contend therein that the Court of Appeals erred in: (a) dismissing the complaint for lack of jurisdiction; and (b) failing to declare the contract void. In the main, they argue that the trial court had jurisdiction over the subject matter of Civil Case No. 88-1644, it being an action for a sum of money with damages, and that no intra-corporate dispute was involved to warrant an exercise of jurisdiction by the SEC.

    After the filing of the Comment to the petition by MASTER and of the Reply thereto by the petitioners, we resolve to give due course to the petition and required the parties to submit their respective memoranda, which they subsequently complied with.

    Further evaluation of the factual antecedents and arguments of the parties leads to no other conclusion that to agree with the Court of Appeals in its judgment, but not solely on the strength of its finding. This petition then has to be denied.

    It is of course settled that jurisdiction over the subject matter of a case is determined from the allegations of the complaint 17 as the latter comprises a concise statement of the ultimate facts constituting the plaintiff’s causes of action. 18

    While it may initially appear that the allegations in the original complaint prima facie sustained the theory of the petitioners, the allegations in the amended complaint brought petitioner’s grievance comfortably within the SEC’s jurisdiction. As shown earlier, the amended complaint went beyond the original complaint’s general allegations by particularizing the ultimate facts constituting "fraudulent schemes, machinations, imaginary transactions or other similar deceits." 19 The succeeding pleadings further clarified the understanding of the parties that, indeed, the subject matter of and causes of action in the case revolves on the contract concerning the purchase and sale of commodity futures and the incidents thereto. Thus, in their answers defendants denied the imputations and set forth counterclaims. In their Answer to the counterclaim 20 of MASTER, the petitioners alleged that MASTER "exploited the minority of Ramon Bernardo, Jr. through misrepresentation which induced Ramon Bernardo, Sr. to give the money to defendant Masters Commodities Futures, Inc. who was also fraudulently induced into making the investment" ; "adopted fraudulent schemes to induced [sic] the son to convinced [sic] his father to make the investment" ; and committed "scheming activities leading to the loss of the alleged investment in commodities," and "acts of bad faith."cralaw virtua1aw library

    In their Answer 21 to the counterclaim of defendants V.R. Bautista and De Pedro, the petitioners contended that the defendants "induced," through "insidious machinations, the minor, Ramon Bernardo, Jr., to enter into a Trading Commodity Agreement without his father’s consent and to give to the defendants the amount of P100,000.00" which "was fraudulently lost" ; adopted fraudulent schemes to induced [sic] the son to convince his father to make the fraudulent investment" ; and committed "scheming activities leading to the fraudulent loss of the alleged investment in commodities."cralaw virtua1aw library

    Then, at trial on the merits, the petitioners presented evidence to substantiate their allegations and imputations of insidious machinations, inducements, misrepresentation, fraud in the transactions and of scheming activities leading to fraudulent loss of the alleged investments in commodities, which they thereafter recapitulated in the Statement of the Case in their Memorandum before the trial court.

    The defendants, on their part, refuted the charges with both testimonial and several pieces of documentary evidence.

    The totality of the foregoing pleadings and evidence demonstrates beyond cavil that what originally appeared in the original complaint to be a simple case of annulment of the commodity agreement and instructions of sale and of purchase with damages, was transformed into a case for recovery of an alleged investment in the commodity futures market and the accompanying damages which petitioners perceived to be directly caused by MASTER’s deceit, inducements, misrepresentation, fraud or fraudulent schemes, insidious machinations, and scheming activities.

    The presentation of the contrariant evidence for and against imputations undoubtedly cured, clarified or expanded, as the case may be, whatever defects in the pleadings or vagueness in the issues there might have been in the amended complaint. Section 5, Rule 10 of the Rules of Court was thus rendered applicable, pro tanto. It provides:chanrob1es virtual 1aw library

    SEC. 5. Amendment to conform to or authorize presentation of evidence. — When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings. Such amendments of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence.

    It is settled that even if the complaint be defective, but the parties go to trial thereon, and the plaintiff, without objection, introduces sufficient evidence to constitute the particular cause of action which it intended to allege in the original complaint, and the defendant voluntarily produces witnesses to meet the cause of action thus established, an issue is joined as fully and as effectively as if it had been previously joined by the most perfect pleadings. 22 Likewise, when issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. 23

    In light of the foregoing, we find no difficulty in ruling that the subject matter of petitioner’s amended complaint or their causes of action therein fell squarely within the exclusive jurisdiction of the Securities and Exchange Commission for, in the first place, it involved, at bottom, the supervisory powers of the SEC over the conduct of the business of commodity futures. Section 3 of P.D. No. 902-A expressly provides that the Commission "shall have absolute jurisdiction, supervision and control over all corporations, partnerships or associations, who (sic) are the grantees of primary franchise and/or a license or permit issued by the government to operate in the Philippines," and paragraph (g) of Section 6 thereof vests upon the SEC the power to authorize the establishment and operation of inter alia, commodity exchanges. Furthermore, under Section 7 of P.D. No. 178 (Revised Securities Act), the SEC is authorized to promulgate, subject to the approval of the Monetary Board, rules and regulations for the registration and regulation of commodity futures contracts and licensing of futures commission merchants, futures brokers, floor brokers and pool operators. Pursuant thereto and to Section 3 of P.D. No. 902-A, as amended, the SEC promulgated on 15 December 1987 the Revised Rules and Regulations on Commodity Futures Trading. 24

    In the second place, the damages prayed for are alleged to have been proximately caused by or to have arisen from the alleged fraud or fraudulent inducements, deceit or deception, insidious machinations and misrepresentation committed by MASTER in connection with or incident to the execution of the customer’s agreement on commodity futures, the margin and deposit requirements and the instructions of purchase and of sale on commodity futures.

    There can be no question that the relationship between the MASTER and the petitioners is one of those within the ambit of paragraph (a) of Section 5 of P.D. No. 902-A, viz., a corporation or its officers and members of "the public." It has been repeatedly held by this Court that in order that the SEC take cognizance of a case, the controversy must pertain to any of the following relationships: (a) between 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 insofar as its franchise, permit or license to operate is concerned; and (d) among stockholders, partners or associates themselves.25cralaw:red

    Elsewise stated, by the relationship of the parties and subject of their controversy, the jurisdiction of the SEC in this case is beyond dispute. We thus reiterate: The better policy in determining which body has jurisdiction over a case would be to consider not only the status or relationship of the parties but also the nature of the question that is the subject of their controversy. 26

    WHEREFORE, the instant petition is DENIED for lack of merit and the challenged decision of the Court of Appeals of 29 December 1994 in CA-G.R. CV No. 34168 is hereby AFFIRMED.

    Costs against the petitioners.

    SO ORDERED.

    Narvasa, C.J., Melo, Francisco and Panganiban, JJ., concur.

    Endnotes:



    1. Rollo, 20-25. Per Isnani, J., with Ibay-Somera and Lipana-Reyes, JJ., concurring.

    2. Original Record (OR), Civil Case No. 88-1644, 293-295. Per Judge Zosimo Z. Angeles.

    3. Id., 1-4.

    4. Id., 47-50.

    5. OR, 63-69. Private respondent Master Commodities Futures, Inc., earlier filed an answer to the original complaint.

    6. Id., 67.

    7. Id., 103-109.

    8. OR, 181-182.

    9. Id., 208, 213, 215, 217.

    10. Id., 211.

    11. OR, 277-278.

    12. Supra, note 2.

    13. OR, 295.

    14. Supra, note 1.

    15. Rollo, 26-31.

    16. Id., 33.

    17. Viray v. Court of Appeals, 191 SCRA 308, 321 [1990]; Abrin v. Campos, 203 SCRA 420, 423 [1991]; Isidro v. Court of Appeals, 228 SCRA 503, 508 [1994]; Sumulong v. Court of Appeals, 232 SCRA 372, 385 [1994].

    18. Section 3, Rule 6, Rules of Court.

    19. Paragraph 9 (par. 7 in original complaint).

    20. OR, 70.

    21. Id., 117.

    22. VICENTE J. FRANCISCO, The Revised Rules of Court (Civil Procedure) 1973 ed., 667-668.

    23. Sea-Land Services, Inc. v. Court of Appeals, 223 SCRA 316, 322 [1993].

    24. 84 O.G. (No. 27), 4 July 1988.

    25. Union Glass and Container Corp. v. Palanca, 126 SCRA 31, 38 [1993]; SEC v. Court of Appeals, 201 SCRA 124, 129 [1991]; Magalad v. Premier Financing Corp., 209 SCRA 260, 264 [1992]; Espino v. NLRC, 240 SCRA 52, 63 [1995]; Mainland Construction Co. Inc. v. Movilla, 250 SCRA 290, 294 [1995].

    26. Viray v. Court of Appeals, 191 SCRA 308, 323 [1990]; Macapalan v. Katalbas-Moscardon, 227 SCRA 49, 54 [1993].

    G.R. No. 120730   October 28, 1996 - RAMON J. BERNARDO, SR., ET AL. v. COURT OF APPEALS, ET AL.


    Back to Home | Back to Main

     

    QUICK SEARCH

    cralaw

       

    cralaw



     
      Copyright © ChanRobles Publishing Company Disclaimer | E-mail Restrictions
    ChanRobles™ Virtual Law Library | chanrobles.com™
     
    RED