SECOND
DIVISION
REYNALDO
M. LOZANO,
Petitioner,
G. R. No. 125221
June 19, 1997
-versus-
HON.
ELIEZER R. DE LOS SANTOS,Presiding Judge,
RTC, Br. 58, Angeles Cityand ANTONIO ANDA,
Respondents.
D
E C I S I O N
PUNO, J.:
This Petition
for
Certiorari seeks to annul
and
set aside the Decision of the Regional Trial Court, Branch 58, Angeles
City which ordered the Municipal Circuit Trial Court, Mabalacat and
Magalang,
Pampanga to dismiss Civil Case No. 1214 for lack of jurisdiction.
The facts are
undisputed. On December 19, 1995,
petitioner Reynaldo M. Lozano filed Civil Case No. 1214 for damages
against
respondent Antonio Anda before the Municipal Circuit Trial Court
[MCTC],
Mabalacat and Magalang, Pampanga. Petitioner alleged that he was the
president
of the Kapatirang Mabalacat-Angeles Jeepney Drivers' Association, Inc.
[KAMAJDA] while respondent Anda was the president of the Samahang
Angeles-Mabalacat
Jeepney Operators' and Drivers' Association, Inc. [SAMAJODA]; in
August 1995, upon the request of the Sangguniang Bayan of Mabalacat,
Pampanga,
petitioner and private respondent agreed to consolidate their
respective
associations and form the Unified Mabalacat-Angeles Jeepney Operators'
and Drivers Association, Inc. [UMAJODA]; petitioner and private
respondent
also agreed to elect one set of officers who shall be given the sole
authority
to collect the daily dues from the members of the consolidated
association;
elections were held on October 29, 1995 and both petitioner and private
respondent ran for president; petitioner won; private respondent
protested
and, alleging fraud, refused to recognize the results of the election;
private respondent also refused to abide by their agreement and
continued
collecting the dues from the members of his association despite several
demands to desist. Petitioner was thus constrained to file the
complaint
to restrain private respondent from collecting the dues and to order
him
to pay damages in the amount of P25,000.00 and attorney's fees of
P500.00.[1]
Private
respondent moved to dismiss the complaint
for lack of jurisdiction, claiming that jurisdiction was lodged with
the
Securities and Exchange Commission [SEC]. The MCTC denied the motion on
February 9, 1996.[2]
It denied reconsideration on March 8, 1996.[3]
Private
respondent filed a petition for certiorari
before the Regional Trial Court, Branch 58, Angeles City.[4]
The trial court found the dispute to be intra-corporate, hence, subject
to the jurisdiction of the SEC, and ordered the MCTC to dismiss Civil
Case
No. 1214 accordingly.[5]
It denied reconsideration on May 31, 1996.[6]
Hence this
petition.cralaw:red
Petitioner claims
that:
THE RESPONDENT JUDGE ACTED WITH
GRAVE
ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND SERIOUS
ERROR
OF LAW IN CONCLUDING THAT THE SECURITIES AND EXCHANGE COMMISSION HAS
JURISDICTION
OVER A CASE OF DAMAGES BETWEEN HEADS/PRESIDENTS OF TWO (2) ASSOCIATIONS
WHO INTENDED TO CONSOLIDATE/MERGE THEIR ASSOCIATIONS BUT NOT YET
[SIC] APPROVED AND REGISTERED WITH THE SECURITIES AND
EXCHANGE
COMMISSION.[7]The jurisdiction of the Securities and
Exchange
Commission
[SEC] is set forth in Section 5 of Presidential Decree No. 902-A.
Section
5 reads as follows:
Sec. 5. The Securities and Exchange
Commission
[has] 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 misrepresentation which may be detrimental to
the
interest of the public and/or of the stockholders, partners, members of
associations or organizations registered with the Commission.
(b) Controversies arising out of
intra-corporate
or partnership relations, between and among stockholders, members or
associates;
between any or all of them and the corporation, partnership or
association
of which they are stockholders, members, or associates, respectively;
and
between such corporation, partnership or association and the state
insofar
as it concerns their individual franchise or right to exist as such
entity.
(c) Controversies in the election or
appointment
of directors, trustees, officers or managers of such corporations,
partnerships
or associations.
(d) Petitions of corporations,
partnerships or
associations to be declared in the state of suspension of payments in
cases
where the corporation, partnership or association possesses sufficient
property to cover all its debts but foresees the impossibility of
meeting
them when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to over its
liabilities,
but is under the management of a Rehabilitation Receiver or Management
Committee created pursuant to this Decree.
The grant of
jurisdiction to the SEC must be viewed
in the light of its nature and function under the law.[8]
This jurisdiction is determined by a concurrence of two elements: [1]
the
status or relationship of the parties; and [2] the nature of the
question
that is the subject of their controversy.[9]
The first element
requires that the controversy
must arise out of intra-corporate or partnership relations
between
and among stockholders, members, or associates; between any or all of
them
and the corporation, partnership or association of which they are
stockholders,
members or associates, respectively; and between such corporation,
partnership
or association and the State in so far as it concerns their individual
franchises.[10]
The second element requires that the dispute among the parties be
intrinsically
connected with the regulation of the corporation, partnership or
association
or deal with the internal affairs of the corporation, partnership or
association.[11]
After all, the principal function of the SEC is the supervision and
control
of corporations, partnership and associations with the end in view that
investments in these entities may be encouraged and protected and their
activities pursued for the promotion of economic development.[12]
There is no
intra-corporate nor partnership relation
between petitioner and private respondent. The controversy between them
arose out of their plan to consolidate their respective jeepney
drivers'
and operators' associations into a single common association. This
unified
association was, however, still a proposal. It had not been approved by
the SEC, neither had its officers and members submitted their articles
of consolidation is accordance with Sections 78 and 79 of the
Corporation
Code. Consolidation becomes effective not upon mere agreement of the
members
but only upon issuance of the certificate of consolidation by the SEC.[13]
When the SEC, upon processing and examining the articles of
consolidation,
is satisfied that the consolidation of the corporations is not
inconsistent
with the provisions of the Corporation Code and existing laws, it
issues
a certificate of consolidation which makes the reorganization official.[14]
The new consolidated corporation comes into existence and the
constituent
corporations dissolved and ceased to exist.[15]
The KAMAJDA and
SAMAJODA to which petitioner and
private respondent belong, are duly registered with the SEC, but these
associations are two separate entities. The dispute between petitioner
and private respondent is not within the KAMAJDA nor the SAMAJODA. It
is
between members of separate and distinct associations. Petitioner and
private
respondent have no intra-corporate relation much less do they have an
intra-corporate
dispute. The SEC, therefore, has no jurisdiction over the complaint.cralaw:red
The doctrine of
corporation by estoppel[16]
advanced by private respondent cannot override jurisdictional
requirements.
Jurisdiction is fixed by law and is not subject to the agreement of the
parties.[17]
It cannot be acquired through or waived, enlarged or diminished by, any
act or omission of the parties, neither can it be conferred by the
acquiescence
of the court.[18]
Corporation by
estoppel is founded on principles
of equity and is designed to prevent injustice and unfairness.[19]
It applies when persons assume to form a corporation and exercise
corporate
functions and enter into business relations with third person. Where
there
is no third person involved and the conflict arises only among those
assuming
the form of a corporation, who, therefore, know that it has not been
registered,
there is no corporation by estoppel.[20]
IN VIEW WHEREOF,
the petition is granted and the
decision dated April 18, 1996 and the order dated May 31, 1996 of the
Regional
Trial Court, Branch 58, Angeles City are set aside. The Municipal
Circuit
Trial Court of Mabalacat and Magalang, Pampanga is ordered to proceed
with
dispatch in resolving Civil Case No. 1214. No costs.cralaw:red
SO ORDERED.cralaw:red
Regalado, Romero,
Mendoza and Torres, Jr., JJ.,
concur.cralaw:red
_________________________________
Endnotes
[1]
Complaint, Annex "C" to the Petition, Rollo, pp. 25-28.
[2]
Annex "D" to the Petition, Rollo, pp. 35-37.
[3]
Annex "E" to the Petition, Rollo, p. 37.
[4]
Civil Case No. 8237.
[5]
Annex "A" to the Petition, Rollo, pp. 18-21.
[6]
Annex "B" to the Petition, Rollo, pp. 22-24.
[7]
Petition, p. 6, Rollo, p. 8.
[8]
Union Glass & Container Corporation v. Securities and Exchange
Commission,
126 SCRA 32, 38 [1983].
[9]
Macapalan v. Katalbas-Moscardon, 227 SCRA 49, 54 [1993]; Viray v. Court
of Appeals, 191 SCRA 308, 323 [1990].
[10]
Union Glass & Container Corporation v. Securities and Exchange
Commission,
supra, at 38; Agpalo, Comments on the Corporation Code of the
Philippines,
pp. 447-448 [1993].
[11]
Dee v. Securities and Exchange Commission, 199 SCRA 238, 250 [1991];
Union
Glass & Container Corporation v. Securities and Exchange
Commission,
supra, at 38.
[12]
Union Glass & Container Corporation v. Securities and Exchange
Commission,
supra, at 38, citing Whereas Clauses of P.D. 902-A.
[13]Section 79, Corporation Code; Campos, The Corporation Code, Comments,
Notes
and Selected Cases, Vol. 2, p. 447 [1990].
[14]
Lopez, The Corporation Code of the Philippines Annotated, Vol. 2, p.
940
[1994].
[15]Section 80, Corporation Code.
[16]Section 21, Corporation Code.
[17]
De Leon v. Court of Appeals, 245 SCRA 166, 176 [1995]; Lozon v.
National
Labor Relations Commission, 240 SCRA 1, 11 [1995].
[18]
Lozon v. National Labor Relations Commission, supra, at 11 [1995]; De
Jesus
v. Garcia, 19 SCRA 554, 558 [1967]; Calimlim v. Ramirez, 118 SCRA 399,
406 [1982].
[19]
Lopez, supra, v. 1, pp. 340-341 [1994].
[20]
Hall v. Piccio, 86 Phil. 603, 605 [1950]; also cited in Agpalo, supra,
at 85.
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