G.R. No. 185647, 26 July 2017

FACTS:

DTTI is a domestic closed corporation owned by the Dy siblings. Due to certain disagreements relating to its management, DTTI instituted an action for injunction against respondents for alleged squandering cash sales from the branch. This was docketed as an intra-corporate case. Respondents, on the other hand, filed an action for dissolution of the corporation. The RTC heard the cases jointly.

The action for the dissolution of the corporation was, however, eventually dismissed due to the respondents’ failure to pay the proper docket fees. However, neither Atty. Go nor Atty. Rabor attended the hearing for respondents. No motion for postponement was also filed. Atty. Asis thus moved that respondents be declared to have waived their right to cross-examine Lorencio, who was DTTI’s last witness. He also asked for 15 days within which to file his written formal offer of evidence. The RTC granted this motion and issued an Order.

RTC ruled in favor of DTTI relying solely on documents presented by the petitioner and ordered injunction against the corporation. CA remanded the case back to the RTC. The respondents challenge the jurisdiction of the RTC in taking cognizance of the action for injunction as an intra-corporate case. According to respondents, since the action for injunction does not involve an intra-corporate dispute, the RTC, sitting as a commercial court, lacked jurisdiction. Its decision on the case is therefore void.

ISSUE:

Whether the action filed before the RTC was an intra-corporate case properly heard by the RTC acting as a special commercial court?

RULING:

Section 5 of the Securities Regulation Code transferred the jurisdiction of the Securities and Exchange Commission (SEC) over intra­corporate disputes to RTCs designated by the Supreme Court as commercial courts. The existence of an intra-corporate dispute must be properly alleged in a complaint filed before a commercial court because the allegations in the complaint determine a tribunal’s jurisdiction over the subject matter. This means that the complaint must make out a case that meets both the relationship and the nature of the controversy tests.

Under the relationship test, a dispute is intra-corporate if it is: (1) between the corporation, partnership or association and the public; (2) between the corporation, partnership or association and the state insofar as its franchise, permit or license to operate is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members or officers; and (4) among the stockholders, partners or associates themselves. The nature of the controversy test, on the other hand, requires that the dispute itself must be intrinsically connected with the regulation of the corporation, partnership or association.

Applying the foregoing tests, we agree with the CA that the complaint filed by DTTI before the RTC was a civil action for injunction and not an intra-corporate dispute.

Our jurisdiction recognizes a civil action for injunction. It is a suit brought for the purpose of enjoining the defendant, perpetually or for a particular time, from the commission or continuance of a specific act, or his or her compulsion to continue performance of a particular act. As a civil action, it falls within the general jurisdiction of the RTCs.

Nevertheless, we disagree with respondents’ contention that the RTC, sitting as a commercial court, had no jurisdiction over the civil action for injunction filed by DTTI. Thus, that DTTI’s civil action for injunction was raffled to, and heard by, an RTC sitting as a commercial court, is more an issue of procedure than one of jurisdiction. Gonzales, in fact, directs that when an ordinary civil case is mistakenly raffled to a branch designated as a Special Commercial Court, the remedy is to refer said case to the Executive Judge for re-docketing and re-raffling among “all courts of the same RTC (including its designated special branches which, by statute, are equally capable of exercising general jurisdiction same as regular branches), as provided for under existing rules.”

*Case Digest by Meriam Rika R. Wong, JD – 4, Andres Bonifacio College, SY 2019-2020