ALMA MAGALAD vs.
PREMIER Magalad argues that the case against
FINANCING CORP (1992)
J. PARAS
I. FACTS
The defendant premier is a financing
company engaged in soliciting an accepting
money placements or deposits.
As alleged, on 12 September 1983, despite
the expired permit to issue commercial
papers and with intention to defraud its
creditors, Premier induced Alma Magalad to
make a money market placement of Php
50,000.00 at 22% interest per annum.
Premier issued 2 post-dated checks
amounting to Php51,079.00 to Magalad.
The checks were eventually dishonored by
the drawee bank for lack of sufficient funds.
Upon making demands to Premier and
getting no response, Magalad filed complaint
for damages with prayer for preliminary
attachment with the RTC-Quezon City.
Premier failed to answer, hence, the RTC
rendered a default judgment ordering
Premier to pay Magalad the Php50,000
principal obligation plus interest, attorney’s
fees and damages.
Premier filed an MR arguing that it is the
Securities and Exchange Commission which
has the exclusive and original jurisdiction
over a corporation under a state of
suspension of payments.
The RTC denied the MR. Upon reaching the
CA, the CA issued a resolution elevating the
instant case to the SC on the ground that the
case involves purely a question of law.
II. ISSUES
Whether or not the RTC has jurisdiction to try
the instant case? [NO]
III. RATIONALE
Premier is an ordinary action for damages
cognizable solely by RTC.
Section 5(a) of PD 902-A grants 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
misrepresentations which may be
detrimental to the public and/or to the
stockholders, partners, members of
associations or organizations registered
with the Commission
Considering that Magalad’s complaint
sufficiently alleges acts amounting to fraud
and misrepresentation committed by
Premier, the SEC must be held to retain its
original and exclusive jurisdiction over the
case. The fraud committed is detrimental to
the interest of the public and therefore,
encompasses a category of relation within
the SEC jurisdiction.
SEC can take cognizance of a case if the
controversy pertain to any of the following
relationships:
1. Between Corporation, Partnership
or Association and the Public
2. Corporation, Partnership or
Association and its stockholders,
partners, members or officers
3. Corporation, Partnership or
Association and the State (relating to
franchise, permit or license)
4. Among the stockholders, partners or
associates themselves
At the case at bar, the recitals of the
complaint sufficiently alleged that devices or
schemes amounting to fraud or
misrepresentation detrimental to the interest
of the public have been resolved to by the
defendant Premier. Thus, it falls under the
adjudicative powers of the SEC pursuant to
Sec 5(a) of PD902-A.
The fact that Premier’s authority to engage in
financing already expired will not divest SEC
of its jurisdiction. Magalad’s money
placements were also in the nature of
investments.

Furthermore, a rehabilitation receiver was

already appointed to Premier and SEC
directed all proceedings or claims against it
be suspended.

Section 5(d) of PD 902-A (as added by

PD1758) provides that SEC has original and
exclusive jurisdiction to hear and decide
cases covering:

Petitions of corporations, partnerships or

associations to be declared in the state of
suspension of payments in cases where the
corporation, partnership or association has no
sufficient assets to cover its liabilities, but is under
the management of a Rehabilitation Receiver or
Management Committee created pursuant to this
Decree.

IV. DISPOSITIVE

Instant appeal is granted.