Imperial and NRDC v Armes

Facts:

Napa and Imperial entered into a MOA to organize a corporation to be named NIDSLAND which will engage in
real estate business. As to their contributions:
 Napa: convey tracts of land to NIDSLAND and Imperial which was intended to be developed into a
subdivision
 Imperial: pay Napal’s tax liabilities, obligation with the bank.

Imperial complied with his obligations under the MOA. While Napa failed to convey the tracts of land and instead,
sold the subject property to Cruz as evidenced by a Deed of Sale.

Imperial filed a derivative suit before the SEC. The SEC rendered a decision in favor of Imperial declaring the Deed
of Absolute Sale between Napal and Cruz as void ab initio, that the sale was simulated.

Issue:

Whether the SEC overstepped its jurisdiction when is nullified the sale between Napal and Cruz and in ordering the
cancellation of Cruz’s TCT

Held:

Yes, because the SEC does not have the jurisdiction to order the cancellation of the sale between Napal and Cruz
and the cancalltion of Cruz’s TCT and transfer to NIDSLAND.

the SEC exercised jurisdiction over intra-corporate controversies precisely because it is a highly-specialized
administrative body in specialized corporate matters. It follows therefore, that where the controversy does not call
for the use of any technical expertise, but the application of general laws, the case is cognizable by the ordinary
courts.

Imperial and NIDSLAND sought to prove that the sale to Cruz was simulated. This involves the application of the
law on sales. It does not concern an adjudication of the rights of Imperial, NIDSLAND and Napal under the
Corporation Code and the internal rules of the corporation.

SEC, in rendering the decision, disregarded established law and jurisprudence on the jurisdiction of the SEC.
Further, it adjudicated on the rights of Cruz, cancelled the deed of sale, and took away his property without giving
him the opportunity to be heard. It is a breach of the basic requirements of due process.