SECURITIES AND EXCHANGE COMMISSION v.

SUBIC BAY GOLD AND

COUNTRY CLUB, INC.
MARCH 11, 2015

On April 25, 1996, Subic Bay Golf and Country club, Inc (SBGCCI) and Universal International
Group Development Corporation (UIGDC) entered into a Development Agreement. UIGDC
agreed to “finance, construct and develop the golf course, for an in consideration of the payment
by SBGCCI of it’s 1, 530 shares of stock.”

Upon, SBGCCI’s application, SEC issued an order for the registration of 3,000 no par value
shares of SBGCCI on July 8, 1996. SBGCCI was also issued a certificate of permit to offer
securities for sale to the public of its 1, 530 no par value proprietary shares on August 9, 1996
the shares were sold at P425,000 per share and the same were used to pay UIGDC for the
development of the golf course.

Complainants Filart and Villareal informed SEC that they had been asking UIGDC for the refund
of their payment for their SGGBCCI shares. UIGDC did not act on their requests. They alleged
that they purchased shares in the same promise of SBGCCI and UIGDC to deliver the ff: 1)
swimming pool and tennis court;2) 18 hole golf course; 3) 9 hole exclusive course and etc.
However, these promises were not delivered. And despite the undelivered promises, they started
to charged monthly dues They were even threated that their shares would be auctioned off if their
back dues would remain unpaid.

SBGCCI and UIGDC in a petition of review questioned the order and jurisdiction of the
Corporation Finance Department’s order before the SEC since the same involved and intra-
corporate dispute. SEC ruled that the proceedings were administrative in nature. It was only
conducted to determining if SEC’s rules and regulations were violated. SEC has power to
investigate possible violations and impose appropriate administrative sanctions. CA, however,
declared SEC’s decision as null and void since it found the case as an intra-corporate controversy
not under SEC’s jurisdiction.
Who between the SEC and the RTC has jurisdiction over this case

HELD:

Before solving the issue, we have to determine whether SEC has the authority to order the return
of purchase price of securities upon finding that there were fraudulent representation of the
prospectus.

The court rules for SBGCCI and UIGDC.

Under PD No. 902-A, SEC has jurisdiction over acts amounting to fraud and misrepresentation
by a corporation’s board of directors, business association and officers, even intra-corporate
disputes. However, jurisdiction over intra-corporate disputes and all other cases enumerated in
SEC 5 had already been transferred to designated RTC under RA no. 8799. For a dispute to be
intra-corporate, it must satisfy the relationship and nature of controversy tests.
Relationship test – requires that the dispute between a:
o Corporation/ partnership/ association and the public;
o A corporation/ partnership/ association and the state of regarding the entity’s franchise,
permit or license to operate;