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1. TIJAM vs.

SIBONGHANOY (23 SCRA 29)


FACTS: Tijam filed for recovery of P1,908 + legal interest from Sibongahanoy.
Defendants filed a counter bond with Manila
Surety and Fidelity Co (Surety). Judgement was in favour of the plaintiffs, a writ of
execution was issued against the defendant. Defendants moved for writ of execution
against surety which was granted. Surety moved to quash the writ but was denied,
appealed to CA without raising the issue on lack of jurisdiction.
CA affirmed the appealed decision. Surety then filed Motion to Dismiss on the ground
of lack of jurisdiction against CFI Cebu in view of the effectivity of Judiciary Act of
1948 a month before the filing of the petition for recovery. Act placed original
exclusive jurisdiction of inferior courts all civil actions for demands not exceeding
2,000 exclusive of interest. CA set aside its earlier decision and referred the case to
SC since it has exclusive jurisdiction over "all cases in which the jurisdiction of any
inferior court is in issue.
ISSUE: WON Surety bond is estopped from questioning the jurisdiction of the CFI
Cebu for the first time upon appeal.YES
RATIO: SC believes that that the Surety is now barred by laches from invoking this
plea after almost fifteen years before the Surety filed its motion to dismiss raising the
question of lack of jurisdiction for the first time - A party may be estopped or barred
from raising a question in different ways and for different reasons. Thus we speak of
estoppel in pais, or estoppel by deed or by record, and of estoppel by laches. Laches,
in a general sense is failure or neglect, for an unreasonable and unexplained length
of time, to do that which, by exercising due diligence, could or should have been
done earlier - Furthermore, it has also been held that after voluntarily submitting a
cause and encountering an adverse decision on the merits, it is too late for the loser
to question the jurisdiction or power of the court -"undesirable practice" of a party
submitting his case for decision and then accepting the judgment, only if favorable,
and attacking it for lack of jurisdiction, when adverse.
: Other merits on the appeal : The surety insists that the lower court should have
granted its motion to quash the writ of execution because the same was issued
without the summary hearing - Summary hearing is "not intended to be carried on in
the formal manner in which ordinary actions are prosecuted" (83 C.J.S. 792). It is,
rather, a procedure by which a question is resolved "with dispatch, with the least
possible delay, and in preference to ordinary legal and regular judicial proceedings"
(Ibid, p. 790). What is essential is that "the defendant is notified or summoned to
appear and is given an opportunity to hear what is urged upon him, and to interpose
a defense, after which follows an adjudication of the rights of the parties - In the case
at bar, the surety had been notified of the plaintiffs' motion for execution and of the
date when the same would be submitted for consideration. In fact, the surety's
counsel was present in court when the motion was called, and it was upon his request
that the court a quo gave him a period of four days within which to file an answer. Yet
he allowed that period to lapse without filing an answer or objection. The surety
cannot now, therefore, complain that it was deprived of its day in court.
The orders appealed from are affirmed.

2. Andaya vs. Abadia

3. Bayog vs. Natino

4. PNOC Shipping and Transpo vs. CA

5. Alday vs. FGU Insurance Corp

6. People vs. Magallanes

7. Denila vs. Bellosillo


SYNOPSIS
For failure to pay the stipulated rentals, the petitioner were dispossessed of their
thirteen-hectare riceland which was ceded to them by way of a civil lease under a
compromise agreement approved by the Court of Agrarian Relations. The writ of
dispossession was issued by the Court of Agrarian Relations pursuant to said
Compromise Agreement.
The petitioners impugned the order of ejectment contending that the Court of
Agrarian Relations lacks jurisdiction to issue the writ of execution because by virtue
of the compromise agreement they possessed the same as civil lessees not as
agricultural tenants and therefore their ejectment falls within the competence of the
proper municipal court. However, the owner-lessor argued that since the Compromise
Agreement was the result of an agrarian case, there is no need for another action to
enforce the same.
Petition dismissed.
SYLLABUS
1. COURTS; JURISDICTION; ONCE ACQUIRED, THE JURISDICTION OF COURT REMAINS
UNTIL THE CASE IS TERMINATED. Once a court acquires jurisdiction over a case it
continues to retain that jurisdiction until the case is finally terminated or complete
remedy granted and such jurisdiction is not terminated by a decision approving an
amicable settlement where the parties assumed that a writ of execution would be
issued to enforce the stipulations thereof.
2. ID.; ID.; ID.; ONE WHO INVOKES THE COURTS JURISDICTION IS ESTOPPED FROM
DENYING THE SAME AFTERWARDS. It is not right for a party who had invoked the
courts jurisdiction in order to secure a particular relief to deny afterwards that same

jurisdiction so as to avoid a writ of execution.


3. JUDGMENT; COMPROMISE; RES JUDICATA; COMPROMISE IS ENFORCEABLE BY WRIT
OF EXECUTION; EFFECT THEREOF. A compromise is a contract and an admission by
the parties that it is a just determination of their rights. It has upon the parties the
effect and authority of res judicata. After its approval by the court and its conversion
into a judgment, it is enforceable by writ of execution, especially where it is
specifically provided in the agreement that writs of execution shall issue to enforce
its stipulations.
4. ID.; ID.; ID.; COURT OF AGRARIAN RELATIONS HAS JURISDICTION TO ISSUE WRITS
OF EXECUTION. The Court of Agrarian Relations has jurisdiction to issue writs of
execution to enforce a compromise agreement validly entered into between the
disputants, ousting the possessors of the land in dispute.
DECISION
This case involves the jurisdiction of the Court of Agrarian Relations to enforce a
compromise whereby the three occupants of a riceland became civil lessees for two
agricultural years. The lessees contend that they can be ejected from the said land
only in an unlawful detainer action instituted in the proper municipal court.
On the other hand, the landowner contends that a new action is not necessary
because the lower court, being vested with jurisdiction to render the decision based
on a compromise agreement, has the power and authority to enforce it in the same
case. The facts are as follows:chanrob1es virtual 1aw library
On June 17, 1971 Cromwel Denila, Isidoro Gubatanga and Freddie Inayan filed in the
Court of Agrarian Relations of Iloilo a complaint against the Beaterio del Santisimo
Rosario de Molo, a corporation hereinafter referred to as the Beaterio, for the purpose
of preventing the Beaterio from ejecting them from its thirteen-hectare riceland
located at Zarraga, Iloilo. They claimed to be the tenants in that land since the
second half of the agricultural year 1969-70 by virtue of written contracts of tenancy
executed between them and Fernando Inayan, the alleged prior possessor of the land
(CAR Case No. 2545).
The Beaterio averred in its answer that the land in question was part of several
parcels of land which were leased to Fernando Inayan, the father of Freddie Inayan,
for a five-year period ending on March 31, 1971. It branded Denila, Gubatanga and
Freddie Inayan as mere dummies of Fernando Inayan who desired to continue his
possession of the land after the termination of his lease. A portion of the land is
occupied by the Sacred Heart Academy which is operated by the Beaterio.
The parties, assisted by their lawyers, entered into a compromise agreement dated
March 24, 1972 which the lower court approved in its decision dated April 24, 1972.
Among the stipulations of the amicable settlement is that the Beaterio, without in
anyway admitting that plaintiffs Denila, Gubatanga and Inayan are bona fide tenants
or agricultural lessees, has agreed "to cede by way of civil lease (not lease tenancy
nor agricultural lease)" to them certain sublots of the said land for two agricultural
years, 1972-73 and 1973-74, or up to March 31, 1974. The rentals to be paid by the
lessees are specified in the agreement. The issuance of a writ of execution in case of
nonpayment of rentals is covered by the following stipulation:jgc:chanrobles.com.ph

"g. That in case of failure on the part of any of the plaintiffs as civil lessees to pay
in full the total annual palay rentals when due as above stipulated, corresponding to
his own respective landholding, the civil lessor Beaterio shall have the right to
terminate the civil lease granted to the defaulting civil lessee or lessees, and
thereupon the said lessor shall also have the right to ask from this Hon. Court for
immediate execution of the present Amicable Settlement in order to obtain
possession of the sublot or sublots correspondingly held in civil lease by the
defaulting lessee or lessees, aside from obtaining the payment of all the rentals due
and payable. A writ of execution may also be granted to the defendant Beaterio in
case the plaintiffs or any one of them should fail to pay the rentals for the past cropyear 1971-72 as provided in conditions (a), (b) and (c)."cralaw virtua1aw library
It was also stipulated that, unless the lease is terminated sooner, the lessees should
deliver the possession of the said landholdings to the Beaterio not later than March
31, 1974.
In a motion for execution dated December 21, 1972 the Beaterio alleged that the
three lessees (now the petitioners) failed to pay the rentals for the crop-year 1971-72
in the aggregate sum of P3,481.84 which were due on April 24, 1972, the date the
amicable settlement was approved by the lower court. The Beaterio further alleged
that Inayan and Denila did not settle in full their rental obligations for the crop-year
1972-73. It prayed for an order of execution so that it could obtain possession of the
lessees landholdings as well as payment of the overdue rentals.
The Agrarian Court granted the motion for execution in its order of January 16, 1973.
The Clerk of Court issued the writ of execution on February 15, 1973. On July 16,
1974, after due notice to the lessees and over their opposition, an alias writ of
execution was issued. By virtue of that writ, the Provincial Sheriff placed the Beaterio
in possession of the said landholdings on July 20, 1974. The lessees motion for
clarification and reconsideration of the order of execution was denied by the lower
court in its order of July 30, 1974.
These special civil actions of certiorari and prohibition were filed only on November 4,
1974 by Denila, Gubatanga and Inayan. Their contention is that the Agrarian Court
lost jurisdiction over their landholdings because they possessed the same as civil
lessees and not as agricultural tenants. They asked that the writ of execution be set
aside.
We are of the opinion that petitioners contention is untenable. There is no question
that the Agrarian Court has jurisdiction over the case initiated by Denila, Gubatanga
and Inayan which was a controversy arising from agrarian relations (Sec. 154, Code
of Agrarian Reforms). The case was not terminated by the decision approving the
amicable settlement. The parties contemplated in the compromise agreement, which
was embodied in the courts decision, that a writ of execution would be issued in the
event that the lessees did not pay the stipulated rentals. It was assumed that the writ
of execution would be issued by the Agrarian Court.
It is axiomatic that once a court has acquired jurisdiction over a case it continues to
retain that jurisdiction until the case is finally terminated (Tuvera v. De Guzman, L20547, April 30, 1965, 13 SCRA 729, 732). "The jurisdiction of the court having once
completely attached, that jurisdiction continues until the complete remedy is
granted" (C. Viuda de Pamintuan v. Tiglao, 53 Phil. 1, 4). It is not right for a party who
had invoked the courts jurisdiction in order to secure a particular relief to deny
afterwards that same jurisdiction so as to avoid a writ of execution (See Tijam v.
Sibonghanoy, L-21450, April 15, 1968, 23 SCRA 29; Ong Ching v. Ramolete, L-35356,

May 18, 1973, 51 SCRA 13; People v. Munar, L-37642, October 22, 1973, 53 SCRA
278).
A compromise is a contract. It is an admission by the parties that it is a just
determination of their rights. It "has upon the parties the effect and authority of res
judicata." After its approval by the court and its conversion into a judgment, it is
enforceable by writ of execution (Art. 2037, Civil Code; Osmea v. Court of Agrarian
Relations, L-21156-7, July 30, 1966, 17 SCRA 828; Serrano v. Miave, L-14678, March
31, 1965, 13 SCRA 461; Tria v. Lirag, 111 Phil. 850, 853. Compare with Uy Tina v.
Avila, L-20900, May 16, 1967, 20 SCRA 37).
In the Osmea case, supra, which is similar to the instant case, it was stipulated in
the compromise agreement between the landlord and the tenant (which was
approved by the Agrarian Court) that the rentals were payable "on or before the
harvest" of each crop-year and that upon failure of the tenant to pay fully any of the
installments agreed upon, the landowner would be immediately entitled to ask for
the execution of the judgment rendered by the court pursuant to the amicable
settlement.
By reason of that stipulation, it was held that the landowner, in case of nonpayment,
could ask for execution as to the 1961-62 rentals without awaiting the end of the
crop-years 1962-63 and 1963-64. And since the nonpayment of the balance of the
rentals for the 1961-62 crop-year was not controverted, the execution to enforce
payment was in order.
It results that the Agrarian Court in this case had jurisdiction to issue the original and
alias writs of execution.
WHEREFORE, the petition is dismissed with costs against the petitioners.
SO ORDERED.

8. Magay vs. Estandian


VENANCIA B. MAGAY, assisted by her husband, VICTORIANO R. MAGAY, plaintiffappellee,
vs.
EUGENIO L. ESTIANDAN, defendant-appellant.
Valeriano V. Santos for appellant.
Inigo R. Pena for appellee.
ANTONIO, J:
Appeal from the judgment of the Court of First Instance of Palawan in an accion
publiciana filed by plaintiff-appellee Venancia B. Magay, assisted by her husband,
Victoriano R. Magay, against the defendant-appellant Eugenio L. Estiandan in Civil
Case No. 518, finding plaintiff-appellee as the registered owner of the land in
question under Transfer Certificate of Title No. 2004, ordering defendant-appellant to
vacate the property within fifteen (15) days after the decision has become final, and
to pay plaintiff-appellee the amount of Ten Pesos (P10.00) monthly as rentals on the
land from October 1965 until he vacates the premises, and to pay the amount of Six
Hundred Pesos (P600.00) by way of attorney's fees and the costs of the suit.

The facts of the case as found by the trial court are as follows:
During the hearing of this case, the Court gathered from the evidence of the plaintiff,
that the plaintiff Venancia B. Magay bought the land. in question. from her mother-inlaw, Soledad de los Reyes. The land was formerly titled in the name of Soledad de los
Reyes under Original Certificate of Title No. E-2020 which was subsequently cancelled
and transferred in the name of the herein plaintiff under Transfer Certificate of Title
No. 2004, Exhibit 'A'. The area bought by the plaintiff from Soledad de los Reyes was
resurveyed, Exhibit Al Exhibit 'A-1-a' is lot No. 1 of Exhibit Al which is the land in
question: The defendant has constructed two houses in the land in question: Exhibit
'A-1-a-1' which is an old house and Exhibit 'A-1-a-2' which is a new house. Before this
property was old by Soledad de los Reyes to the plaintiff, the former sent two letters,
Exhibits 'C' and 'D' to the defendant telling him to vacate the premises. After the
plaintiff has acquired the property in question, she sent other letters to the defendant
advising him to vacate the premises, Exhibits 'E' and F The plaintiff has declared the
property in question for purposes of taxation, Exhibit 'G' and has paid the real estate
taxes, Exhibit 'H'. Due to the refusal of the defendant to vacate the premises in
question, the plaintiff was obliged to hire the services of a lawyer and spent P600.00
for attorney's fees.
On the other hand, the defendant testified that he has filed a miscellaneous sales
application, Exhibit '6' over the land in question. said application, according to him, is
now pending in the Bureau of Lands and it has neither-been rejected nor approved.
The defendant bases his application on the decision rendered by Judge Bartolome
Revilla in the case of El Gobierno de las Islas Filipinos contra Antonio Aborot y otros
Exhibit '5' adjudicating the land in question in favor of the Government of the
Philippines. Moreover, the defendant questions the validity of the title issued to
Soledad de log Reyes, alleging that the issuance and reconstitution thereof was done
under anomalous circumstances.
Appellants brought this case on appeal directly to this Court on the representation
that only questions of law are involved. After a careful analysis of the issues raised, it
appears that the principal question to be resolved is whether appellant can question
in this proceedings the validity of Original Certificate No. E-2020 issued to Soledad de
los Reyes, now d and of the subsequent issuance of Transfer Certificate of Title No.
2W4 by the Register of Deeds to plaintiff-appellee as a consequence of the
registration of the deed of sale executed by Soledad de los Reyes in favor of plaintiffappellee dated June 26, 1963, on the ground that Original Certificate of Title No. E2020 was allegedly "fraudulently issued" to the late Soledad de los Reyes in 1948.
It is well-settled that a torrens title cannot be co attacked. The issue on the validity of
the title can only in action expressly instituted for that purpose. 1 Even assuming that
the land in question is still part of the public domain, then the appellant is not the
proper party to institute the reversion of the land but it must be the Solicitor General
in the name of the Republic of the Philippines. 2
Finally, We also find no merit in appellant's contention that the lower Court erred in
assuming jurisdiction over the case. As clearly emphasized by Justice Fred Ruiz Castro
(now Chief Justice of this Court) in Serrano v. Munoz Hi Motors, Inc.," 3 jurisdiction
over the subject matter is determined by the allegations of the complaint,
irrespective of whether or not the plaintiff is entitled to recover upon all or some of
the claims asserted therein-a matter that can be resolved only after and as a result of
the trial. Nor may the jurisdiction of the court be made to depend upon the defenses
set up in the answer or upon the motion to dismiss, for, were we to be governed by

such rule, the question of jurisdiction could depend almost entirely upon the
defendant." The lower court did not commit any am in declaring that plaintiffappellee's complaint is actually an accion publiciana rather than one for unlawful
detainer, within the intendment of Section 1, Rule 70 of the procedural law.
WHEREFORE, in view of the foregoing, the judgment appealed from is hereby
affirmed, with costs against the appellant.
1. G.R. No. L-57707 November 19, 1982 PHILEX MINING CORPORATION,
petitioner,
vs.
HON. DOMINGO CORONEL REYES, Presiding Judge, Court of First Instance of
Albay, 10th Judicial District, Branch IV, and RICHARD HUENEFELD,
respondents.
Agrava, Lucero, Alikpala, & Ginea Law Office for petitioner.
Munoz Law Office for respondent.
MELENCIO-HERRERA, J.:
A special civil action for certiorari seeking to set aside the Orders of respondent Judge
of the Court of First Instance of Albay in Civil Case No. 6400, denying petitioner's
Motion to Dismiss based on lack of jurisdiction on March 12, 1981, and the Motion for
its reconsideration on June 25, 1981.
The relevant facts follow:
Private respondent, Richard Huenefeld, is a stockholder of petitioner Philex Mining
Corporation (Philex, for short). He originally owned 800,000 shares of stock.
On February 15, 1979, Philex declared a 10% stock dividend. Stock Certificate No.
190579 for 80,000 shares was issued by Philex in favor of Huenefeld. On April 18,
1979, Philex sent the stock certificate to Huenefeld through its transfer agent, First
Asian, Stock Transfer, Inc. (First Asian, for brevity). Huenefeld claims that he never
received the stock certificate.
On February 6, 1980, First Asian wrote Huenefeld informing him that the stock
certificate had been delivered to him at his address at Michelle Apartment, 2030 A.
Mabini Street, Manila; and that if the certificate could not be located that Huenefeld
execute an Affidavit of Loss, with the notice of loss to be published once a week for
three (3) consecutive weeks in a newspaper of general circulation in accordance with
the procedure prescribed BY Republic Act No. 201 (now Section 73, Corporation
Code).
On March 4, 1980, Huenefeld, through counsel, replied that RA 201 is not applicable
because the stock certificate was not lost in the possession of the stockholder; that
assuming it was, the expenses of publication and premiums for the bond should be at
Philex's expense; and demanded the issuance of a replacement stock certificate.
Huenefeld also submitted an Affidavit of Loss but did not comply with the other
requirements on publication.
On November 3, 1980, Huenefeld commenced suit for Specific Performance with
Damages against Philex, First Asian and/or the latter's General Manager, before the
Court of First Instance of Albay, Branch IV, Legaspi City (Civil Case No. 6400),
presided by respondent Judge, to compel the issuance of a replacement for Stock
Certificate No. 190579, plus damages.
On January 27, 1981, Philex filed a Motion to Dismiss on the ground that the Court of
First Instance has no jurisdiction over the case, the issue being one of intra-corporate
relationship between a stockholder and a corporation, which under Presidential
Decree No. 902-A, falls within the original and exclusive jurisdiction of the Securities
and Exchange Commission (SEC).
Huenefeld filed an Opposition claiming that the refusal of Philex to issue a
replacement certificate resulted in actual damages to him, and thus, it is no longer a
case of intra-corporate conflict, but one which is civil or tortious in nature.

On March 12, 1981, respondent Court issued the first questioned Order holding in
abeyance resolution of the incident as the grounds alleged did not appear to be
indubitable. Philex moved for reconsideration.
In the interim, Philex filed a Petition with the SEC (SEC Case No. 002053) praying that
the Commission hear the controversy; that Huenefeld be held to have received Stock
Certificate No. 190579 and had subsequently lost the same; and that the provisions
of RA 201, or Section 73 of the new Corporation Code, be followed for the issuance of
a replacement certificate, at Huenefeld's expense.
Philex informed respondent Court of the filing of the Petition with the SEC and
reiterated that Civil Case No. 6500 be dismissed.
On June 25, 1981, respondent Court issued the second challenged Order denying
Philex's Motion for Reconsideration for lack of merit.
On August 17, 1981, Philex filed the present Petition.
On August 21, 1981, we issued a Temporary Restraining Order enjoining respondent
Judge from further proceeding with Civil Case No. 6400. And on October 19, 1981, we
resolved to give due course and required the parties to submit simultaneous
Memoranda, with which they complied.
The issue is whether respondent Court of First Instance has jurisdiction over the
present controversy, which Philex contends is an intra-corporate one, but which
Huenefeld denies.
Section 5 of Presidential Decree No. 902-A provides:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of
associations registered with it as expressly granted under existing laws and decrees;
it shall have original and exclusive jurisdiction to hear and decide cases involving:
a) ...
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 (Emphasis supplied)
Evident from the foregoing is that an intra-corporate controversy is one which arises
between a stockholder and the corporation. There is no distinction, qualification, nor
any exemption whatsoever. The provision is broad and covers all kinds of
controversies between stockholders and corporations. The issue of whether or not a
corporation is bound to replace a stockholder's lost certificate of stock is a matter
purely between a stockholder and the corporation. It is a typical intra-corporate
dispute. The question of damages raised is merely incidental to that main issue.
Huenefeld's attempt to limit intra-corporate controversies thus:
The phrase 'controversies, arising out of intra-corporate relations' would seem to
refer to controversies, cases or intramurals among or between stockholders and the
corporation involving the exercise of stockholders' privileges, rights, benefits and
their duties in a corporation, and the existence in law of a corporation.
Like, for instance, an example of 'controversies arising out of an intra- corporate
relation' are cases between stockholders in 1) contesting or vying for a seat in the
Board of Directors, 2) questions on voting by proxy, 3) election and tenure of office
and qualification of directors, 4) removal and resignation of Directors, 5) repeal and
amendment of corporate charter and by-laws, 6) questions on corporation meetings
and increase of capital stocks, etc. (pp. 70, 80, Rollo).
Is not well taken. The foregoing interpretation does not square with the intent of the
law, which is to segregate from the general jurisdiction of regular Courts
controversies involving corporations and their stockholders and to bring them to the
SEC for exclusive resolution, in much the same way that labor disputes are now
brought to the Ministry of Labor and Employment (MOLE) and the National Labor

Relations Commission (NLRC), and not to the Courts.


The Securities and Exchange Commission, on October 7, 1981, in resolving the
Motion to Dismiss filed by Huenefeld before it, ruled:
xxx xxx xxx
After a thorough consideration of the allegations and arguments adduced in the
motion to dismiss, as wen as petitioners opposition thereto, the Commission resolves
to. DENY said motion. It appearing that the instant suit before us involves an intracorporate dispute, the same is, therefore, within the original and exclusive
jurisdiction of the Commission to resolve. (pp. 94-95, Ibid)
xxx xxx xxx
The controversy between the parties being clearly an intra-corporate one, it is the
SEC, as held by it, and not respondent Court of First Instance, that has original and
exclusive jurisdiction, by express mandate of the law.
WHEREFORE, granting this Petition, the challenged Orders of respondent Judge, dated
March 12, 1981 and June 25, 1981, are hereby annulled and set aside, and Civil Case
No. 6400 of the Court of First Instance of Albay is hereby ordered dismissed. Private
respondent may seek relief in SEC. Case No. 2053 now pending with the Securities
and Exchange Commission. The Temporary Restraining Order heretofore issued is
hereby made permanent.
Costs against private respondent, Richard Huenefeld.
SO ORDERED.
2. G.R. No. L-64013 November 28, 1983
UNION GLASS & CONTAINER CORPORATION and CARLOS PALANCA, JR., in his
capacity as President of Union Glass & Container Corporation, petitioners,
vs.
THE SECURITIES AND EXCHANGE COMMISSION and CAROLINA HOFILEA,
respondents.
Eduardo R. Ceniza for petitioners.
The Solicitor General for respondent SEC.
Remedios C. Balbin for respondent Carolina Y. Hofilea.
ESCOLIN, J.:+.wph!1
This petition for certiorari and prohibition seeks to annul and set aside the Order of
the Securities and Exchange Commission, dated September 25, 1981, upholding its
jurisdiction in SEC Case No. 2035, entitled "Carolina Hofilea, Complainant, versus
Development Bank of the Philippines, et al., Respondents."
Private respondent Carolina Hofilea, complainant in SEC Case No. 2035, is a
stockholder of Pioneer Glass Manufacturing Corporation, Pioneer Glass for short, a
domestic corporation engaged in the operation of silica mines and the manufacture
of glass and glassware. Since 1967, Pioneer Glass had obtained various loan
accommodations from the Development Bank of the Philippines [DBP], and also from
other local and foreign sources which DBP guaranteed.
As security for said loan accommodations, Pioneer Glass mortgaged and/or assigned
its assets, real and personal, to the DBP, in addition to the mortgages executed by
some of its corporate officers over their personal assets. The proceeds of said
financial exposure of the DBP were used in the construction of a glass plant in
Rosario, Cavite, and the operation of seven silica mining claims owned by the
corporation.
It appears that through the conversion into equity of the accumulated unpaid
interests on the various loans amounting to P5.4 million as of January 1975, and
subsequently increased by another P2.2 million in 1976, the DBP was able to gain
control of the outstanding shares of common stocks of Pioneer Glass, and to get two,
later three, regular seats in the corporation's board of directors.

Sometime in March, 1978, when Pioneer Glass suffered serious liquidity problems
such that it could no longer meet its financial obligations with DBP, it entered into a
dacion en pago agreement with the latter, whereby all its assets mortgaged to DBP
were ceded to the latter in full satisfaction of the corporation's obligations in the total
amount of P59,000,000.00. Part of the assets transferred to the DBP was the glass
plant in Rosario, Cavite, which DBP leased and subsequently sold to herein petitioner
Union Glass and Container Corporation, hereinafter referred to as Union Glass.
On April 1, 1981, Carolina Hofilea filed a complaint before the respondent Securities
and Exchange Commission against the DBP, Union Glass and Pioneer Glass, docketed
as SEC Case No. 2035. Of the five causes of action pleaded therein, only the first
cause of action concerned petitioner Union Glass as transferee and possessor of the
glass plant. Said first cause of action was based on the alleged illegality of the
aforesaid dacion en pago resulting from: [1] the supposed unilateral and unsupported
undervaluation of the assets of Pioneer Glass covered by the agreement; [2] the selfdealing indulged in by DBP, having acted both as stockholder/director and secured
creditor of Pioneer Glass; and [3] the wrongful inclusion by DBP in its statement of
account of P26M as due from Pioneer Glass when the same had already been
converted into equity.
Thus, with respect to said first cause of action, respondent Hofilea prayed that the
SEC issue an order:t.hqw
1. Holding that the so called dacion en pago conveying all the assets of Pioneer Glass
and the Hofilea personal properties to Union Glass be declared null and void on the
ground that the said conveyance was tainted with.t.hqw
A. Self-dealing on the part of DBP which was acting both as a controlling
stockholder/director and as secured creditor of the Pioneer Glass, all to its advantage
and to that of Union Glass, and to the gross prejudice of the Pioneer Glass,
B. That the dacion en pago is void because there was gross undervaluation of the
assets included in the so-called dacion en pago by more than 100% to the prejudice
of Pioneer Glass and to the undue advantage of DBP and Union Glass;
C. That the DBP unduly favored Union Glass over another buyer, San Miguel
Corporation, notwithstanding the clearly advantageous terms offered by the latter to
the prejudice of Pioneer Glass, its other creditors and so-called 'Minority
stockholders.'
2. Holding that the assets of the Pioneer Glass taken over by DBP and part of which
was delivered to Union Glass particularly the glass plant to be returned accordingly.
3. That the DBP be ordered to accept and recognize the appraisal conducted by the
Asian Appraisal Inc. in 1975 and again in t978 of the asset of Pioneer Glass. 1
In her common prayer, Hofilea asked that DBP be sentenced to pay Pioneer Glass
actual, consequential, moral and exemplary damages, for its alleged illegal acts and
gross bad faith; and for DBP and Union Glass to pay her a reasonable amount as
attorney's fees. 2
On April 21, 1981, Pioneer Glass filed its answer. On May 8, 1981, petitioners moved
for dismissal of the case on the ground that the SEC had no jurisdiction over the
subject matter or nature of the suit. Respondent Hofilea filed her opposition to said
motion, to which herein petitioners filed a rejoinder.
On July 23, 1981, SEC Hearing Officer Eugenio E. Reyes, to whom the case was
assigned, granted the motion to dismiss for lack of jurisdiction. However, on
September 25, 1981, upon motion for reconsideration filed by respondent Hofilea,
Hearing Officer Reyes reversed his original order by upholding the SEC's jurisdiction
over the subject matter and over the persons of petitioners. Unable to secure a
reconsideration of the Order as well as to have the same reviewed by the
Commission En Banc, petitioners filed the instant petition for certiorari and
prohibition to set aside the order of September 25, 1981, and to prevent respondent
SEC from taking cognizance of SEC Case No. 2035.
The issue raised in the petition may be propounded thus: Is it the regular court or the

SEC that has jurisdiction over the case?


In upholding the SEC's jurisdiction over the case Hearing Officer Reyes rationalized
his conclusion thus:t.hqw
As correctly pointed out by the complainant, the present action is in the form of a
derivative suit instituted by a stockholder for the benefit of the corporation,
respondent Pioneer Glass and Manufacturing Corporation, principally against another
stockholder, respondent Development Bank of the Philippines, for alleged illegal acts
and gross bad faith which resulted in the dacion en pago arrangement now being
questioned by complainant. These alleged illegal acts and gross bad faith came about
precisely by virtue of respondent Development Bank of the Philippine's status as a
stockholder of co-respondent Pioneer Glass Manufacturing Corporation although its
status as such stockholder, was gained as a result of its being a creditor of the latter.
The derivative nature of this instant action can also be gleaned from the common
prayer of the complainant which seeks for an order directing respondent
Development Bank of the Philippines to pay co-respondent Pioneer Glass
Manufacturing Corporation damages for the alleged illegal acts and gross bad faith as
above-mentioned.
As far as respondent Union Glass and Container Corporation is concerned, its
inclusion as a party-respondent by virtue of its being an indispensable party to the
present action, it being in possession of the assets subject of the dacion en pago and,
therefore, situated in such a way that it will be affected by any judgment thereon, 3
In the ordinary course of things, petitioner Union Glass, as transferee and possessor
of the glass plant covered by the dacion en pago agreement, should be joined as
party-defendant under the general rule which requires the joinder of every party who
has an interest in or lien on the property subject matter of the dispute. 4 Such joinder
of parties avoids multiplicity of suits as well as ensures the convenient, speedy and
orderly administration of justice.
But since petitioner Union Glass has no intra-corporate relation with either the
complainant or the DBP, its joinder as party-defendant in SEC Case No. 2035 brings
the cause of action asserted against it outside the jurisdiction of the respondent SEC.
The jurisdiction of the SEC is delineated by Section 5 of PD No. 902-A as follows:t.
hqw
Sec. 5. In addition to the regulatory and adjudicative function of the Securities and
Exchange Commission over corporations, partnerships and other forms of
associations registered with it as expressly granted under existing laws and devices,
it shall have original and exclusive jurisdiction to hear and decide cases involving:
a] Devices and 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 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 appointments of directors, trustees, officers or
managers of such corporations, partnerships or associations.
This grant of jurisdiction must be viewed in the light of the nature and function of the
SEC under the law. Section 3 of PD No. 902-A confers upon the latter "absolute
jurisdiction, supervision, and control over all corporations, partnerships or
associations, who are grantees of primary franchise and/or license or permit issued
by the government to operate in the Philippines ... " The principal function of the SEC
is the supervision and control over corporations, partnerships and associations with
the end in view that investment in these entities may be encouraged and protected,

and their activities pursued for the promotion of economic development. 5


It is in aid of this office that the adjudicative power of the SEC must be exercised.
Thus the law explicitly specified and delimited its jurisdiction to matters intrinsically
connected with the regulation of corporations, partnerships and associations and
those dealing with the internal affairs of such corporations, partnerships or
associations.
Otherwise stated, in order that the SEC can take cognizance of a case, the
controversy must pertain to any of the following relationships: [a] between the
corporation, partnership or association and the public; [b] between the corporation,
partnership or association and its stockholders, partners, members, or officers; [c]
between the corporation, partnership or association and the state in so far as its
franchise, permit or license to operate is concerned; and [d] among the stockholders,
partners or associates themselves.
The fact that the controversy at bar involves the rights of petitioner Union Glass who
has no intra-corporate relation either with complainant or the DBP, places the suit
beyond the jurisdiction of the respondent SEC. The case should be tried and decided
by the court of general jurisdiction, the Regional Trial Court. This view is in accord
with the rudimentary principle that administrative agencies, like the SEC, are
tribunals of limited jurisdiction 6 and, as such, could wield only such powers as are
specifically granted to them by their enabling statutes. 7 As We held in Sunset View
Condominium Corp. vs. Campos, Jr.: 8t.hqw
Inasmuch as the private respondents are not shareholders of the petitioner
condominium corporation, the instant cases for collection cannot be a 'controversy
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,' which controversies are under the original and exclusive
jurisdiction of the Securities & Exchange Commission, pursuant to Section 5 [b] of
P.D. No. 902-A. ...
As heretofore pointed out, petitioner Union Glass is involved only in the first cause of
action of Hofileas complaint in SEC Case No, 2035. While the Rules of Court, which
applies suppletorily to proceedings before the SEC, allows the joinder of causes of
action in one complaint, such procedure however is subject to the rules regarding
jurisdiction, venue and joinder of parties. 9 Since petitioner has no intra-corporate
relationship with the complainant, it cannot be joined as party-defendant in said case
as to do so would violate the rule or jurisdiction. Hofileas complaint against
petitioner for cancellation of the sale of the glass plant should therefore be brought
separately before the regular court But such action, if instituted, shall be suspended
to await the final outcome of SEC Case No. 2035, for the issue of the validity of the
dacion en pago posed in the last mentioned case is a prejudicial question, the
resolution of which is a logical antecedent of the issue involved in the action against
petitioner Union Glass. Thus, Hofileas complaint against the latter can only prosper
if final judgment is rendered in SEC Case No. 2035, annulling the dacion en pago
executed in favor of the DBP.
WHEREFORE, the instant petition is hereby granted, and the questioned Orders of
respondent SEC, dated September 25, 1981, March 25, 1982 and May 28, 1982, are
hereby set aside. Respondent Commission is ordered to drop petitioner Union Glass
from SEC Case No. 2035, without prejudice to the filing of a separate suit before the
regular court of justice. No pronouncement as to costs.
SO ORDERED.
3. PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, MANILA, ANTONIO
M. MAGTALAS, JOSE ARANAS, JUAN D. LIM, JOSE F. PERALTA and BENJAMIN P.
PAULINO, Petitioners, v. LABOR ARBITER LACANDOLA S. LEANO of the
National Labor Relations Commission and RUFINO R. TAN, Respondents.

De Santos, Balgos and Perez Law Office, for Petitioners.


The Solicitor General for respondent Arbiter.
Caparas, Ilagan, Alcantara & Gatmaytan Law Office for Private Respondent.
SYLLABUS
1. COMMERCIAL LAW; CORPORATION LAW; SECURITIES AND EXCHANGE COMMISSION;
JURISDICTION THEREOF VIS-A-VIS THE NATIONAL LABOR RELATIONS COMMISSION;
CASE AT BAR. The jurisdiction of the Securities and Exchange Commission (SEC)
vis-a-vis the National Labor Relations Commission (NLRC) is in issue. An
intracorporate controversy would call for SEC jurisdiction. A labor dispute, that of the
NLRC.
2. ID.; ID.; INTRA-CORPORATE CONTROVERSIES; LEGALITY OF ELECTION OF
CORPORATE DIRECTORS, IN THE NATURE OF; CASE AT BAR. Basically, therefore,
the question is whether the election of directors on August 1, 1981 and the election
of officers on September 5, 1981, which resulted in TANs failure to be re-elected,
were validly held. This is the crux of the question that TAN has raised before the SEC.
Even in his position paper before the NLRC, TAN alleged that the election on August
1, 1981 of the three directors was in contravention of the PSBA By-Laws providing
that any vacancy in the Board shall be filled by a majority vote of the stockholders at
a meeting specially called for the purpose. Thus, he concludes, the Board meeting on
September 5, 1981 was tainted with irregularity on account of the presence of
illegally elected directors without whom the results could have been different. TAN
invoked the same allegations in his complaint filed with the SEC. So much so, that on
December 17, 1981, the SEC (Case No. 2145) rendered a Partial Decision annulling
the election of the three directors and ordered the convening of a stockholders
meeting for the purpose of electing new members of the Board. 9 The correctness of
said conclusion is not for us to pass upon in this case. TAN was present at said
meeting and again sought the issuance of injunctive relief from the SEC. The
foregoing indubitably show that, fundamentally, the controversy is intra-corporate in
nature.
3. ID.; ID.; SECURITIES AND EXCHANGE COMMISSION; JURISDICTION; ORIGINAL AND
EXCLUSIVE OVER INTRA-CORPORATE CONTROVERSIES UNDER PRESIDENTIAL DECREE
NO. 902-A; CASE AT BAR. Presidential Decree No. 902-A vests in the Securities and
Exchange Commission original and exclusive jurisdiction to hear and decide
controversies involving the election of directors, officers, or managers of corporations
registered with the Commission, the relation between and among its stockholders,
and between them and the corporation. The instant case is not a case of dismissal.
The situation is that of a corporate office having been declared vacant, and of TANs
not having been elected thereafter. The matter of whom to elect is a prerogative that
belongs to the Board, and involves the exercise of deliberate choice and the faculty
of discriminative selection. Generally speaking, the relationship of a person to a
corporation, whether as officer or as agent or employee, is not determined by the
nature of the services performed, but by the incidents of the relationship as they
actually exist. (Bruce v. Travelers Ins. Co., 266 F2d 781, cited in 19 Am. Jur. 2d 526).
DECISION

MELENCIO-HERRERA, J.:
This Petition for Certiorari questions the jurisdiction of respondent Labor Arbiter over
the present controversy (No. NCR-9-20-81) involving private respondent-complainant,
Rufino R. Tan (TAN), and petitioners, the Philippine School of Business Administration
(PSBA), a domestic corporation, and majority of its Directors.chanrobles lawlibrary :
rednad
TAN is one of the principal stockholders of PSBA. Before September 5, 1981, he was a
Director and the Executive Vice President enjoying salaries and allowances.
On August 1, 1981, at the PSBA Board of Directors regular meeting, three members
were elected to fill vacancies in the seven-man body.
On September 5, 1981, also during a regular meeting, the Board declared all
corporate positions vacant except those of the Chairman and President, and at the
same time elected a new set of officers. TAN was not re-elected as Executive VicePresident. 1
On September 16, 1981, TAN filed with the National Labor Relations Commission
(NLRC) (National Capital Region) a complaint for Illegal Dismissal against petitioners
alleging that he was "summarily, illegally, irregularly and improperly removed from
his position as Executive Vice-President . . . without cause, investigation or notice"
(NLRC Case No. NCR-9-20-81) (the Labor Case, in brief).
On September 21, 1981, TAN also filed a one-million-peso damage suit against
petitioners before the then Court of First Instance of Rizal, Quezon City, for illegal and
oppressive removal (Civil Case No. Q-33444).
And, on September 28, 1981, TAN lodged before the Securities and Exchange
Commission (SEC) another complaint against petitioners essentially questioning the
validity of the PSBA elections of August 1, 1981 and September 5, 1981, and of his
"ouster" as Executive Vice-President (SEC Case No. 2145).chanrobles lawlibrary :
rednad
On October 13, 1981, SEC issued a subpoena duces tecum commanding the
production of corporate documents, books and records. 2
On October 15, 1981, respondent Labor Arbiter also issued a subpoena duces tecum
to submit the same books and documents. 3
Before the NLRC, petitioners moved for the dismissal of TANs complaint, invoking the
principle against split jurisdiction.
On October 22, 1981, petitioners availed of this Petition contending mainly
that:jgc:chanrobles.com.ph
"1. The respondent labor arbiter illegally assumed jurisdiction over the complaint for
Illegal Dismissal because the failure of the private respondent to be re-elected to
the corporate position of Executive Vice-President was an intra-corporate question
over which the Securities and Exchange Commission had already assumed
jurisdiction.

"2. The issuance by the respondent labor arbiter of a subpoena duces tecum was
likewise without jurisdiction especially if considered in the light of procedural and
substantial requirements therefor such that it is imperative that the supervising
authority of this Honorable Court should be exercised to prevent a substantial wrong
and to do substantial justice." 4
TAN counter-argues that his sole and exclusive cause of action is illegal dismissal,
falling within the jurisdiction of the NLRC, for he was dismissed suddenly and
summarily without cause in violation of his constitutional rights to due process and
security of tenure. He prays that his dismissal be declared illegal and that his
reinstatement be ordered with full backwages and without loss of other
benefits.chanroblesvirtualawlibrary
We issued a Temporary Restraining Order, enjoining respondent Labor Arbiter from
proceeding in any manner with the Labor Case, and subsequently gave due course to
the Petition.
The jurisdiction of the SEC vis-a-vis the NLRC is in issue. An intracorporate
controversy would call for SEC jurisdiction. A labor dispute, that of the NLRC.
Relevant and pertinent it is to note that the PSBA is a domestic corporation duly
organized and existing under our laws. General management is vested in a Board of
seven directors elected annually by the stockholders entitled to vote, who serve until
the election and qualification of their successors. Any vacancy in the Board of
Directors is filled by a majority vote of the subscribed capital stock entitled to vote at
a meeting specially called for the purpose, and the director or directors so chosen
hold office for the unexpired term. 5 Corporate officers are provided for, among them,
the Executive Vice-President, who is elected by the Board of Directors from their own
number. 6 The officers receive such salaries or compensation as the Board of
Directors may fix. 7 The By-Laws likewise provide that should the position of any
officer of the corporation become vacant by reason of death, resignation,
disqualification, or otherwise, the Board of Directors, by a majority vote, may choose
a successor or successors who shall hold office for the expired term of his
predecessor. 8
It was at a board regular monthly meeting held on August 1, 1981, that three
directors were elected to fill vacancies. And, it was at the regular Board Meeting of
September 5, 1981 that all corporate positions were declared vacant in order to
effect a reorganization, and at the ensuing election of officers, TAN was not re-elected
as Executive Vice-President.
Basically, therefore, the question is whether the election of directors on August 1,
1981 and the election of officers on September 5, 1981, which resulted in TANs
failure to be re-elected, were validly held. This is the crux of the question that TAN
has raised before the SEC. Even in his position paper before the NLRC, TAN alleged
that the election on August 1, 1981 of the three directors was in contravention of the
PSBA By-Laws providing that any vacancy in the Board shall be filled by a majority
vote of the stockholders at a meeting specially called for the purpose. Thus, he
concludes, the Board meeting on September 5, 1981 was tainted with irregularity on
account of the presence of illegally elected directors without whom the results could
have been different.
TAN invoked the same allegations in his complaint filed with the SEC. So much so,
that on December 17, 1981, the SEC (Case No. 2145) rendered a Partial Decision

annulling the election of the three directors and ordered the convening of a
stockholders meeting for the purpose of electing new members of the Board. 9 The
correctness of said conclusion is not for us to pass upon in this case. TAN was present
at said meeting and again sought the issuance of injunctive relief from the SEC.
The foregoing indubitably show that, fundamentally, the controversy is intracorporate in nature. It revolves around the election of directors, officers or managers
of the PSBA, the relation between and among its stockholders, and between them
and the corporation. Private respondent also contends that his "ouster" was a
scheme to intimidate him into selling his shares and to deprive him of his just and fair
return on his investment as a stockholder received through his salary and allowances
as Executive Vice-President. Vis-a-vis the NLRC, these matters fall within the
jurisdiction of the SEC. Presidential Decree No. 902-A vests in the Securities and
Exchange Commission:jgc:chanrobles.com.ph
". . . original and exclusive
involving:jgc:chanrobles.com.ph

jurisdiction

to

hear

and

decide

cases

"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 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 appointments of directors, trustees, officers or
managers of such corporations, partnerships or associations. 10
This is not a case of dismissal. The situation is that of a corporate office having been
declared vacant, and of TANs not having been elected thereafter. The matter of
whom to elect is a prerogative that belongs to the Board, and involves the exercise of
deliberate choice and the faculty of discriminative selection. Generally speaking, the
relationship of a person to a corporation, whether as officer or as agent or employee,
is not determined by the nature of the services performed, but by the incidents of the
relationship as they actually exist. 11
With the foregoing conclusion, it follows that the issuance of a subpoena duces tecum
by the Labor Arbiter will have to be set aside.
WHEREFORE, judgment is hereby rendered (1) ordering respondent Labor Arbiter to
dismiss the complaint in NLRC Case No. NCR-9-20-81 for lack of jurisdiction; (2)
nullifying the subpoena duces tecum issued by him in said case; and (3) declaring the
Temporary Restraining Order heretofore issued permanent.
No costs.
SO ORDERED.

4.

1wph1.t

3.