G.R. No. 160016, 27 February 2006


In April 1997, respondent opened a cash or regular account with petitioner for buying and selling securities as evidenced by the Account Application Form. The parties’ business relationship was governed by the terms and conditions stated therein.

Since April 10, 1997, respondent actively traded his account, and as a result of such trading activities, he accumulated an outstanding obligation in favor of petitioner in the sum of P6,617,036.22 as of April 30, 1997. Respondent failed to pay petitioner his liabilities. Petitioner sold respondent’s securities to set off against his unsettled obligations.

After the sale of respondent’s securities and application of the proceeds thereof against his account, respondent’s remaining unsettled obligation to petitioner was P3,364,313.56. Despite said demand and the lapse of said requested extension, respondent failed and/or refused to pay his accountabilities to petitioner.

Respondent claims that he was induced to trade in a stock security with petitioner because the latter allowed offset settlements wherein he is not obliged to pay the purchase price. Rather, it waits for the customer to sell. And if there is a loss, petitioner only requires the payment of the deficiency (i.e., the difference between the higher buying price and the lower selling price). In addition, it charges a commission for brokering the sale. However, if the customer sells and there is a profit, petitioner deducts the purchase price and delivers only the surplus – after charging its commission..

The trial court also found respondent to be equally at fault, by incurring excessive credits and waiting to see how his investments turned out before deciding to invoke the (Revised Securities Act) RSA. Thus, the RTC concluded that petitioner and respondent were in pari delicto and therefore without recourse against each other. CA upheld the lower court’s finding.


Whether the trial court had jurisdiction over Abacus alleged violation of the Revised Securities Act.


It is axiomatic that the allegations in the complaint, not the defenses set up in the answer or in the motion to dismiss determine which court has jurisdiction over an action.44 Were we to be governed by the latter rule, the question of jurisdiction would depend almost entirely upon the defendant.

The instant controversy is an ordinary civil case seeking to enforce rights arising from the Agreement (AOF) between petitioner and respondent. It relates to acts committed by the parties in the course of their business relationship. The purpose of the suit is to collect respondent’s alleged outstanding debt to petitioner for stock purchases.

To be sure, the RSA and its Rules are to be read into the Agreement entered into between petitioner and respondent. Compliance with the terms of the AOF necessarily means compliance with the laws. Thus, to determine whether the parties fulfilled their obligations in the AOF, this Court had to pass upon their compliance with the RSA and its Rules. This, in no way, deprived the Securities and Exchange Commission (SEC) of its authority to determine willful violations of the RSA and impose appropriate sanctions therefor, as provided under Sections 45 and 46 of the Act.
Moreover, we uphold the SEC in its Opinion, thus:

“As to the issue of jurisdiction, it is settled that a party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction.

*Case Digest by April Rose B. Tuanda, JD-IV, Andres Bonifacio Law School, S.Y 2019-2020