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SECOND DIVISION
[G.R. No. 125221. June 19, 1997]
REYNALDO M. LOZANO, Petitioner, v. HON. ELIEZER R. DE LOS SANTOS, Presiding Judge, RTC, Br. 58, Angeles City; and 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 P500.00.1chanroblesvirtuallawlibrary
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, 1996.3chanroblesvirtuallawlibrary
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
intracorporate, 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, 1996.6chanroblesvirtuallawlibrary
Hence this petition. 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."7chanroblesvirtuallawlibrary
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:
"Section 5. x x x [T]he 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 intracorporate 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 respect very fall due or in cases where the corporation, partnership or association has no sufficient assets to cover 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.9chanroblesvirtuallawlibrary
The first element requires that the controversy must arise out of
intracorporate 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, partnerships 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.12chanroblesvirtuallawlibrary
There is no intracorporate 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 in 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 dissolve and cease to exist.15chanroblesvirtuallawlibrary
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 intracorporate relation much less do they have an intracorporate dispute. The SEC therefore has no jurisdiction over the complaint.
The doctrine of corporation by estoppel16
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.18chanroblesvirtuallawlibrary
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 persons.
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.20chanroblesvirtuallawlibrary
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.
SO ORDERED.
Regalado, (Chairman), Romero, Mendoza, and Torres, Jr., JJ., concur.
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, pp. 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.