Emiliano Melgazo founded and organized Concepcion Progressive Association (CPA) and in its behalf bought a parcel of land to be converted to a wet market, to generate income which were mostly rentals paid to CPA. When he died, his son petitioner Manuel Melgazo succeeded him as President and other petitioners as officers and they started to process the registering of CPA as a stock corporation. Meanwhile, the other elected officers and members formed their own group and registered themselves in SEC as officers and members of respondent CPAI. The petitioners were not listed either as members or officers and respondent CPAI objected when they made collection of the rental payments. CPAI filed a case in SEC for mandatory injunction but with the passage of RA 8799, was transferred to a special commercial court. Petitioners contend that since they were not CPAI members the case did not involve intra-corporate dispute to warrant the jurisdiction of the commercial court.
Whether or not there is intra-corporate dispute to warrant the jurisdiction of the special commercial court.
To determine whether a case involves an intra-corporate controversy to be heard and decided by the RTC, two elements must concur:
(1) the status or relationship of the parties and
(2) the nature of the question that is subject of their controversy.
The first element requires that the controversy must arise out of intra-corporate or partnership relations: (a) between any or all of the parties and the corporation, partnership or association of which they are stockholders, members or associates; (b) between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates and (c) between such corporation, partnership or association and the State insofar as it concerns their individual franchises. On the other hand, the second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy.
In the case at bar, these elements are not present. The records reveal that petitioners were never officers nor members of CPAI. CPAI itself admitted this in its pleadings. In fact, petitioners were the only remaining members of CPA which, obviously, was not the CPAI that was registered in the SEC.
Moreover, the issue in this case does not concern the regulation of CPAI (or even CPA). The determination as to who is the true owner of the disputed property entitled to the income generated therefrom is civil in nature and should be threshed out in a regular court. Cases of this nature are cognizable by the RTC under BP 129. Therefore, the conflict among the parties here was outside the jurisdiction of the special commercial court.