Mambulao Lumber Company v. PNB (G.R. No. L-22973)

Facts:

Petitioner Mambulao Lumber applied for an industrial loan with herein respondent PNB and was approved with its real estate, machinery and equipments as collateral. PNB released the approved loan but petitioner failed to pay and was later discovered to have already stopped in its operation. PNB then moved for the foreclosure and sale of the mortgaged properties. The properties were sold and petitioner sent a bank draft to PNB to settle the balance of the obligation. PNB however alleges that a remaining balance stands and a foreclosure sale would still be held unless petitioner remits said amount. The foreclosure sale proceeded and petitioner’s properties were taken out of its compound. Petitioner filed actions before the court and claims among others, moral damages.

Issue:

Whether or not petitioner corporation, who has already ceased its operation, may claim for moral damages.

Ruling: NO.

Herein appellant’s claim for moral damages, however, seems to have no legal or factual basis. Obviously, an artificial person like herein appellant corporation cannot experience physical sufferings, mental anguish, fright, serious anxiety, wounded feelings, moral shock or social humiliation which are basis of moral damages. A corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages. The same cannot be considered under the facts of this case, however, not only because it is admitted that herein appellant had already ceased in its business operation at the time of the foreclosure sale of the chattels, but also for the reason that whatever adverse effects of the foreclosure sale of the chattels could have upon its reputation or business standing would undoubtedly be the same whether the sale was conducted at Jose Panganiban, Camarines Norte, or in Manila which is the place agreed upon by the parties in the mortgage contract.

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Garcia and Dumago v. Philippine Airlines (G.R. No. 164856)

Facts:

Petitioners-employees filed a complaint for illegal dismissal against respondent PAL who dismissed them after they were allegedly caught in the act of sniffing shabu within its premises. The Labor Arbiter ruled for the petitioners and ordered immediately for their reinstatement. Prior to this decision, SEC had placed PAL under an Interim Rehabilitation Receiver, and subsequently under a Permanent Rehabilitation Receiver. PAL appealed and the Labor Tribunal ruled in their favor. Subsequently, the Labor Arbiter issued a writ of execution for the reinstatement and issued a notice of garnishment. The Labor Tribunal affirmed the writ and notice but suspended and referred the action to the Rehabilitation Receiver of PAL. On appeal, CA found for respondent PAL.

Issue:

Whether or not PAL being under corporate rehabilitation suspends any monetary claims to it.

Ruling: YES.

It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be suspended. As stated early on, during the pendency of petitioners’ complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver.

While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive.

Atwel v. Concepcion Progressive Association (G.R. No. 169370)

Facts:

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.

Issue:

Whether or not there is intra-corporate dispute to warrant the jurisdiction of the special commercial court.

Ruling: NO.

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.

Florencio Orendain v. BF Homes (G.R. No. 146313)

Facts:

Respondent BF Homes, a domestic corporation involved in developing and selling residential lots filed a petition for rehabilitation and suspension of payments as it incurred liabilities in the course of its operations. SEC ordered the appointment of a rehabilitation receiver with herein petitioner Orendain as its Chairman. Sometime later, BF Homes represented by petitioner Orendain sold a parcel of land to the Local Superior of the Franciscan Sisters of the Immaculate Phils. Inc (LSFSIPI). SEC ordered a new committee of receivers and relieved petitioner of its duties. BF Homes then filed before the court an action for reconveyance of the property sold to LSFSIPI alleging petitioner acted in its individual capacity and therefore had no title over the property. Petitioner argues RTC had no jurisdiction over the case since BF Homes’ suit was instituted against him as its former receiver. The trial court and CA found for BF Homes.

Issue:

Whether or not the reconveyance suit involves intra-corporate dispute cognizable by SEC.

Ruling: NO.

Clearly, the controversy involves matters purely civil in character and is beyond the ambit of the limited jurisdiction of the SEC.

Section 5 of PD No. 902-A does not apply in the instant case. The LSFSIPI is neither an officer nor a stockholder of BF Homes, and this case does not involve intra-corporate proceedings. In addition, the seller, petitioner Orendain, is being sued in his individual capacity for the unauthorized sale of the property in controversy. Hence, we find no cogent reason to sustain petitioner’s manifestation that the resolution of the instant controversy depends on the ratification by the SEC of the acts of its agent or the receiver because the act of Orendain was allegedly not within the scope of his authority as receiver. Furthermore, the determination of the validity of the sale to LSFSIPI will necessitate the application of the provisions of the Civil Code on obligations and contracts, agency, and other pertinent provisions. In addition, jurisdiction over the case for reconveyance is clearly vested in the RTC as provided in paragraph (2), Section 19, B.P. Blg. 129.

DMRC Enterprises v. Este Del Sol Mountain Reserve (G.R. No. L-57936)

Facts:

Petitioner DMRC entered into an agreement with respondent where the former would lease its heavy equipment on the condition that the latter would advance a certain sum and 30% of the collection would be invested in the purchase of shares of stock of DMRC. As a result of the agreement, DMRC performed its obligation but respondent despite repeated demands to it, refused to comply. Thus, petitioner filed a complaint before the trial court. Respondent moved to dismiss on the ground that since the nature of the suit involves intra-corporate matters, it is SEC that has jurisdiction. Trial court found for respondent.

Issue:

Whether or not the suit involves intra-corporate controversy cognizable by SEC.

Ruling: NO.

A perusal of the complaint, styled “sum of money “, shows that the case at bar does not involve intra-corporate matters as to make it fall within the original and exclusive jurisdiction of the Securities and Exchange Commission. It is clear that petitioner DMRC has no intra-corporate relation with the respondent corporation. Nor can petitioner’s cause of action be said to involve or arise from an intra-corporate matter. The complaint merely states that a contract of lease of heavy equipment was entered into by the parties and that respondent lessee failed to pay the agreed consideration for said lease, and petitioner now seeks to enforce the contract seeking payment under the Civil Code of the Philippines. It must be stressed that the plaintiff-petitioner submitted himself to the jurisdiction of the lower court as creditor and the respondent did so as debtor. The fact that the case involves shares of stock to be used as payment for lease rentals does not convert it into an intra-corporate controversy. In fact, the greater of the petitioner’s claim is in terms of cash or money or pass upon a money claim under a lease contract would be beyond the competence of the Securities and Exchange Commission.

Further buttressing the petitioner’s stand is the fact that it is not a shareholder of the respondent corporation, no transfer or registration of shares having been made in its name yet. Precisely, the petitioner prays that it be made a stockholder of the corporation by virtue of the agreement in the lease contract. Hence, there can be no intra-corporate controversy between a stockholder and the corporation in the case at bar. It must be remembered that a determination of the rights of the parties under the contract is necessary before any mention can be made of the issuance of shares of stock. Petitioner must first be shown to be entitled to its claim under the disputed contract. Such a determination falls under the jurisdiction of the Regional Trial Court, particularly as it involves not only a question of issuance of shares but more so, the interpretation of a contract of lease and a claim for a sum of money under the said contract. Only after a finding of entitlement and the implementation according to the contractual terms may the Securities and Exchange Commission assume jurisdiction in case a question later arises regarding said shares. To enforce the basic contract is clearly beyond the power of the Securities and Exchange Commission and would be excess of jurisdiction if it were to act thereon.

*This is a case falling under the old rule where SEC had jurisdiction over intra-corporate disputes.