Islamic Directorate vs SEC

G.R. No. 117897. May 14, 1997

IDP-Tamano Group alleges that sometime in 1971, Islamic leaders

of all Muslim major tribal groups in the Philippines headed by
Dean Cesar Adib Majul organized and incorporated the ISLAMIC
DIRECTORATE OF THE PHILIPPINES (IDP), the primary purpose of
which is to establish an Islamic Center in Quezon City for, the
construction of religious institutions in QC to facilitate effective
practice of the Islamic faith in the area. Libyan government
donated money to the IDP to purchase land for the said purpose.
The martial law prompted the Board of IDP to flee to the middle
east. Two factions claiming to be the Board arose from the flight.
Neither of the factions were elected by the stockholders. An
unofficial board resolution authorized the sale of the purchased
land. The original board of directors then sought the nullity of the
sale. The RTC ruled that the sale was valid. The SEC however
ruled otherwise. The CA adopted the RTC ruling. The IDP-Tamano
group then raised this petition concerning the jurisdiction of the
SEC to declare the nullity of the sale.

Issue: Whether the SEC has jurisdiction to decide on the validity of

the subject sale.

Ruling: Yes. The SEC is granted original and exclusive jurisdiction

to hear cases involving controversies in the selection or appointment
of directors, trustees, officers, or managers of such corporations,
partnerships or associations. The court ruled then that the SEC has the
inclusive power to declare who is not the legitimate IDP Board.

In the present case, such power was exercised by the SEC when
it declared the subject sale invalid. The reason is that the IDP board
who executed the sale has no authority to do such. Hence, the SEC
has jurisdiction to decide on the validity of the subject sale by
virtue of an inclusive power derived on its original and exclusive
jurisdiction to hear cases involving controversies in the selection or
appointment of directors, trustees, officers, or managers of such
corporations, partnerships or associations.