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574 Phil. 430


[ G.R. No. 169370, April 14, 2008 ]




The present petition under Rule 45 of the Rules of Court assails the decision[1] of the Court of Appeals (CA), dated March 17, 2005 in CA-G.R. SP No. 85170, declaring petitioners Eustacio Atwel,[2] Lucia Pilpil and Manuel Melgazo estopped from questioning the jurisdiction of Branch 8 of the Regional Trial Court (RTC) of Tacloban City as a special commercial court under Republic Act (RA) No. 8799.[3]

The facts follow. 

In 1948, then Assemblyman Emiliano Melgazo[4] founded and organized Concepcion Progressive Association (CPA) in Hilongos, Leyte.  The organization aimed to provide livelihood to and generate income for his supporters. 

In 1968, after his election as CPA president, Emiliano Melgazo bought a parcel of land in behalf of the association. The property was later on converted into a wet market where agricultural, livestock and other farm products were sold. It also housed a cockpit and an area for various forms of amusement. The income generated from the property, mostly rentals from the wet market, was paid to CPA. 

When Emiliano Melgazo died, his son, petitioner Manuel Melgazo, succeeded him as CPA president and administrator of the property. On the other hand, petitioners Atwel and Pilpil were elected as CPA vice-president and treasurer, respectively. 

In 1997, while CPA was in the process of registering as a stock corporation, its other elected officers and members formed their own group and registered themselves in the Securities and Exchange Commission (SEC) as officers and members of respondent Concepcion Progressive Association, Inc. (CPAI). Petitioners were not listed either as officers or members of CPAI. Later, CPAI objected to petitioners' collection of rentals from the wet market vendors. 

In 2000, CPAI filed a case in the SEC for mandatory injunction.[5] With the passage of RA 8799, the case was transferred to Branch 24 of the Southern Leyte RTC and subsequently, to Branch 8 of  the Tacloban City RTC. Both were special commercial courts. 

In the complaint, CPAI alleged that it was the owner of the property and petitioners, without authority, were collecting rentals from the wet market vendors. 

In their answer, petitioners refuted CPAI's claim saying that it was preposterous and impossible for the latter to have acquired ownership over the property in 1968 when it was only in 1997 that it was incorporated and registered with the SEC. Petitioners added that since the property was purchased using the money of petitioner Manuel Melgazo's father (the late Emiliano Melgazo), it belonged to the latter. 

On June 9, 2004, the special commercial court ruled that the deed of sale covering the property was in the name of CPA, not Emiliano Melgazo:
The terms and language of said Deed is unmistakable that the vendee is [CPA], through Emiliano Melgazo, and Emiliano Melgazo signed said Deed "for and [in] behalf of the CPA"...there is therefore no doubt as to who the vendee is. It is [CPA] and not Emiliano Melgazo. As such, it is [CPA] who is the owner of said property and not [petitioner] Manuel Melgazo... [Petitioners] contend that the money used in the purchase of [the property] was Emiliano Melgazo['s]. This Court is not persuaded and to rule otherwise...will be a contravention [to] the Parole Evidence Rule.[6]
In the dispositive portion of the decision, the court, however, considered CPA to be one and the same as CPAI:
WHEREFORE, premises considered, this Court finds for [CPAI] and against [petitioners] and the latter are hereby directed to cease and desist from collecting the vendor's fee for and [on] behalf of [CPAI] and to account what they have collected from October 1996 up to the present and [turn over] the same to the proper officer. 

Aggrieved, petitioners went to the CA and contested the jurisdiction of the special commercial court over the case. According to them, they were not CPAI members, hence the case did not involve an intra-corporate dispute "between and among members" so as to warrant the special commercial court's jurisdiction over it. CPAI, on the other hand, argued that petitioners were already in estoppel as they had participated actively in the court proceedings. 

In its assailed decision of March 17, 2005, although the CA found that the special commercial court should not have tried the case since there was no intra-corporate dispute among CPAI members or officers, it nonetheless held that petitioners were already barred from questioning the court's jurisdiction based on the doctrine of estoppel. Quoting this Court's ruling in Tijam v. Sibonghanoy,[8] the CA held:
An examination of the record of the case will show that [CPAI] admitted in its Pre-Trial Brief and Amended Pre-Trial Brief that petitioners are not its members. The fact that petitioners are admittedly not members of [CPAI], then, [the special commercial court] should not have taken cognizance of the case as [it] exercises special and limited jurisdiction under R.A. No. 8799. However, as correctly argued and pointed out by [CPAI], the acts of the petitioners, through their counsel, in participating in the trial of the that they themselves consider the trial court to have jurisdiction over the case.[9]

xxx                   xxx                   xxx

...[I]n the case of Tijam v. Sibonghanoy, the Supreme Court categorically that:
"The rule is that the jurisdiction over the subject matter is conferred upon the courts exclusively by law, and as the lack of it affects the very authority of the court to take cognizance of the case, the objection may be raised at any stage of the proceedings. However, considering the facts and the circumstances of the present case, a party may be barred by laches from invoking this plea for the first time on appeal for the purpose of annulling everything done in the case with the active participation of said party invoking the plea."
Hence, we agree with [CPAI] that petitioners, after actively participating in the trial of the case, can no longer be allowed to impugn the jurisdiction of the court...[10]

xxx                   xxx                   xxx

WHEREFORE, based on the foregoing premises, judgment is hereby rendered by us DISMISSING the petition filed in this case and AFFIRMING the DECISION dated June 9, 2004 of the [special commercial court] of Tacloban City, Branch 8 in SEC Case No. 2001-07-110. 

Petitioners filed a motion for reconsideration but it was denied by the CA.[12] Hence, this petition. 

Petitioners essentially argue that estoppel cannot apply because a court's jurisdiction is conferred exclusively by the Constitution or by law, not by the parties' agreement or by estoppel. 

We agree. 

Originally, Section 5 of Presidential Decree (PD) 902-A[13] conferred on the SEC original and exclusive jurisdiction over the following:

(1)       Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may  be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association;
(2)       Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; or association of which they are stockholders, members, or associates, respectively;
(3)       Controversies in the election or appointment of directors, trustees, officers or managers of corporations, partnerships, or associations;
(4)       Petitions of corporations, partnerships or associations to be declared in the state of suspension of payment 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 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...(emphasis supplied)

Upon the enactment of RA 8799 in 2000, the jurisdiction of the SEC over intra-corporate controversies and other cases enumerated in Section 5 of PD 902-A was transferred to the courts of general jurisdiction. Under this authority, Branch 8 of the Tacloban City RTC, acting as a special commercial court, deemed the mandatory injunction case filed by CPAI an intra-corporate dispute falling under subparagraph (2) of the aforecited provision as it involved the officers and members thereof. 

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.[14]
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.[15] If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy.[16]

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.[17] Therefore, the conflict among the parties here was outside the jurisdiction of the special commercial court. 

But did the doctrine of estoppel bar petitioners from questioning the jurisdiction of the special commercial court? No.

In Lozon v. NLRC,[18] this Court came up with a clear rule on when jurisdiction by estoppel applies and when it does not:
The operation of estoppel on the question of jurisdiction seemingly depends on whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same "must exist as a matter of law, and may not be conferred by the consent of the parties or by estoppel." However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position - that the lower court had jurisdiction.... (emphasis supplied)
The ruling was reiterated in Metromedia Times Corporation [(Metromedia)] v. Pastorin,[19] where we reversed the CA ruling that Metromedia was already estopped from questioning the jurisdiction of the labor arbiter (LA) after it participated in the proceedings before him. There, an illegal dismissal case was filed by an employee against Metromedia alleging that his transfer to another department[20] was tantamount to constructive dismissal. Realizing the issue was properly cognizable by a voluntary arbitrator, Metromedia assailed the LA's jurisdiction in the NLRC and the CA. The CA, also citing Tijam,[21] ruled erroneously that Metromedia was already barred from questioning the LA's jurisdiction. 

We likewise held in Metromedia that Tijam provided an exceptional circumstance. To void the trial court's decision in Tijam for lack of jurisdiction was not only unfair but patently revolting considering that the question on jurisdiction was raised only after 15 years of tedious litigation.[22] We said:
The notion that the defense of lack of jurisdiction may be waived by estoppel on the party invoking the same most prominently emerged in Tijam v. Sibonghanoy....[H]owever, Tijam represented an exceptional case wherein the party invoking the lack of jurisdiction only did so after fifteen (15) years, and at a stage where the case was already elevated to the Court of Appeals.
In Calimlim v. Ramirez,[23] which we extensively quoted in Metromedia, we spoke of Tijam in this sense:
A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that jurisdiction is a matter of law and may not be conferred by consent or agreement of the parties....[T]his doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of [Tijam v.]Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstances involved in [Tijam v.]Sibonghanoy which justified the departure from the accepted doctrine of non-waivability of objection to jurisdiction has been ignored and instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling [therein] not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.
The rule remains that estoppel does not confer jurisdiction on a tribunal that has none over the cause of action or subject matter of the case.[24] Unfortunately for CPAI, no exceptional circumstance appears in this case to warrant divergence from the rule. Jurisdiction by estoppel is not available here.

Consequently, CPAI cannot be permitted to wrest from petitioners (as the remaining CPA officers) the administration of the disputed property until after the parties' rights are clearly adjudicated in the proper courts. It is neither fair nor legal to bind a party to the result of a suit or proceeding in a court with no jurisdiction.[25] The decision of a tribunal not vested with the appropriate jurisdiction is null and void.[26]

WHEREFORE, the petition is hereby GRANTED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 85170 is REVERSED and SET ASIDE. Accordingly, SEC Case No. 2001-07-110 is DISMISSED for lack of jurisdiction.



Associate Justice


Chief Justice

Associate Justice

(On Official Leave)

Associate Justice

Associate Justice

[**] Judge Salvador Y. Apurillo, presiding judge of  Branch 8 of the Regional Trial Court of Tacloban City, was impleaded as respondent. However, his name was deleted from the title pursuant to Rule 45, Section 4 of the Rules which states that public respondents, like judges of the lower courts, need not be impleaded in the petition.

[1] Penned by Justice Isaias P. Dicdican, with the concurrence of Justices Vicente L. Yap (retired) and Enrico A. Lanzanas, Twentieth Division of the Court of Appeals. Rollo, pp. 29-35.

[2] Also referred to as "Eustacio Atuel" in the records.

[3] The Securities Regulation Code, which took effect on August 8, 2000. Under RA 8799, jurisdiction over intra-corporate controversies and other cases in PD 902-A (Reorganization of the Securities and Exchange Commission) was transferred from the Securities and Exchange Commission (SEC) to the Regional Trial Court (RTC). The creation of special commercial courts was by virtue of A.M. No. 00-11-03-SC promulgated on 21 November 2000.

[4] Petitioner Manuel Melgazo's father.

[5] With a prayer for the issuance of a writ of preliminary injunction. SEC Case No. 2001-07-110.

[6] Rollo, p. 80. Under Rule 130, Section 9, when the terms of an agreement have been reduced to writing, it is considered to contain all the terms agreed upon. As between the parties and their successors in interest, there can be no evidence of such terms other than the contents of the written agreement.

[7] Id., p. 81. Decided by Judge Salvador Y. Apurillo.

[8] 131 Phil. 556 (1968). In this case, Tijam filed a case for recovery of sum of money in 1948 in the then Court of First Instance (CFI), now RTC. Respondent Sibonghanoy's surety filed a counter-bond. When Sibonghanoy lost to Tijam, a writ of execution was later issued against the bond. The surety opposed the execution and assailed the CFI's jurisdiction contending that it was the inferior courts that had jurisdiction over the case. The Supreme Court held in this case that, although the inferior court had jurisdiction, the surety was already estopped from questioning the CFI's jurisdiction considering that  it participated (as a quasi-party) in the proceedings and it was only after 15 years that the question on jurisdiction was raised.

[9] Supra at note 1.

[10] Id., p. 33.

[11] Id., p. 34.

[12] Resolution dated August 12, 2005. Rollo, pp. 36-37.

[13] Reorganization of the Securities and Exchange Commission.

[14] Speed Distributing Corporation v. CA, 469 Phil. 739 (2004).

[15] Id.

[16] Id.

[17] The Judiciary Reorganization Act.

[18] 310 Phil. 1 (1995).

[19] G.R. No. 154295, 29 July 2005, 465 SCRA 320.

[20] Due to his failure to pay his personal obligations to Metromedia's client.

[21] Supra at note 8.

[22] Id. It was Sibonghanoy's surety that questioned the court's jurisdiction in this case.

[23] No. L-34362, 19 November 1982, 118 SCRA 399.

[24] See also Southeast Asian Fisheries and Development Center-Aquaculture Department (SEAFDEC-AQD) v. NLRC, G.R. No. 86773, 14 February 1992, 206 SCRA 283; Union Motors Corporation v. NLRC, 373 Phil. 310 (1999).

[25]Calimlim v. Ramirez, supra.

[26] Id.

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