Title
A and A Continental Commodities Philippines, Inc. vs. Securities and Exchange Commission
Case
G.R. No. 55343
Decision Date
Aug 16, 1993
Broker unilaterally raised margin requirements, prematurely sold contracts, leading to significant losses; SEC upheld jurisdiction over fraud claims and denied counsel disqualification.
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Case Digest (G.R. No. 55343)

Facts:

Background of the Parties:

  • Petitioner, A & A Continental Commodities Philippines, Inc., is a domestic corporation engaged in the commodities brokerage business.
  • Private respondent, Rolando G. Aguila, entered into a contract with petitioner for the purchase or sale of commodities on August 3, 1979.

Transaction Details:

  • On January 21, 1980, private respondent purchased seven copper contracts through petitioner at specific prices, with a total margin requirement of P131,250.00, drawn from his cash deposit of P306,326.46 with petitioner.

Dispute Over Margin Requirements:

  • On January 23, 1980, petitioner unilaterally increased the margin requirement per contract from P18,750 to P75,000, demanding an additional P344,771.05 by 5 P.M. the same day.
  • Private respondent requested additional time to raise the funds and asked that any sale of his contracts not be made immediately upon the opening of trading if prices were low. Petitioner refused and sold five contracts at $1.2150 per pound immediately upon the opening of trading on January 24, 1980, and the remaining two at $1.25 per pound later.

Private Respondent’s Claims:

  • Private respondent claimed a loss of P199,646.68 due to the premature sale and alleged that he would have made a profit of P100,000 had the sale been made later.
  • He filed a complaint with the Securities and Exchange Commission (SEC) on March 19, 1980, seeking:
    1. Revocation of petitioner’s certificate of registration.
    2. Payment of P299,646.68 plus interest.
    3. Moral and exemplary damages of P1,000,000.
    4. Attorney’s fees and litigation costs.

Procedural History:

  • Petitioner filed a motion to dismiss the SEC case on April 28, 1980, arguing lack of jurisdiction. The SEC denied the motion on September 24, 1980, prompting petitioner to file the instant petition for certiorari and prohibition.

Motion to Disqualify Counsel:

  • Private respondent moved to disqualify petitioner’s counsel, alleging a conflict of interest due to prior representation by the law firm Santiago, Fornier, Tinga & Associates. Petitioner countered that the lawyer in question had withdrawn from the firm before the relevant events.

Issue:

  1. Whether the SEC has jurisdiction over SEC Case No. 1886, particularly over the claims for revocation of petitioner’s certificate of registration and the recovery of monetary damages.
  2. Whether private respondent’s motion to disqualify petitioner’s counsel should be granted.

Ruling:

  • The Supreme Court denied the petition, upholding the SEC’s jurisdiction over the case.
  • The temporary restraining order issued on October 29, 1980, was dissolved.

Ratio:

  1. Jurisdiction of the SEC:

    • The SEC has jurisdiction over the revocation of petitioner’s certificate of registration under Section 6(L) of Presidential Decree No. 902-A.
    • The SEC also has jurisdiction over the monetary claims due to allegations of fraud and misrepresentation by petitioner, which fall under Section 5 of Presidential Decree No. 902-A. The Court cited precedents (Orosa, Jr. v. Court of Appeals and Magalad v. Premiere Financing Corporation) to affirm that the SEC retains jurisdiction over cases involving fraud detrimental to the public interest, even if the claims involve sums of money.
  2. Motion to Disqualify Counsel:

    • The Court denied the motion to disqualify petitioner’s counsel, finding that the lawyer in question had withdrawn from the law firm before the relevant events, and the firm no longer existed at the time of the alleged conflict.

Conclusion:

  • The SEC has original and exclusive jurisdiction over the case due to the allegations of fraud and misrepresentation, which are detrimental to the public interest. The petition was denied, and the temporary restraining order was dissolved.


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