Dionisio v. Court of First Instance of South Cotabato
REITERATIONFacts
The Antecedents: Stockholders Filomeno Lamis and Neville Lamis filed a derivative suit against officers/stockholders of ETCO Timber Corporation (ETCO) for accounting, damages, annulment of contracts, and upholding of corporate presidency. They also applied for a writ of preliminary injunction. Procedural History: On June 8, 1982, the Presiding Judge of the Court of First Instance of South Cotabato issued an Order of preliminary injunction without notice and hearing, enjoining defendants from continuing logging operations, representing ETCO, interfering with plaintiffs' operations, selling logs, and enforcing board resolutions. The order also directed the seizure of cut logs. The defendants filed a motion to dismiss and reconsider the injunction on grounds of lack of notice, jurisdiction, and improper venue. Before the motion could be heard, the judge died, and the sheriff began implementing the writ. The Petition: The defendants filed a special civil action for certiorari with injunction, assailing the June 8, 1982 order as a nullity due to lack of notice and hearing, lack of jurisdiction over the subject matter, and improper venue.
Issue(s)
Whether the Order of preliminary injunction dated June 8, 1982, was issued with grave abuse of discretion amounting to lack of jurisdiction. Whether the Court of First Instance had jurisdiction over the subject matter of the derivative suit.
Ruling
The petition is meritorious. The assailed Order of June 8, 1982, is set aside, and the complaint is ordered dismissed without prejudice to its filing with the proper forum. The temporary restraining order issued by this Court is made permanent.
Ratio Decidendi
On the issuance of the preliminary injunction without notice and hearing: The assailed Order of June 8, 1982, was issued in violation of Section 5 of Rule 58 of the Rules of Court, as amended by Batas Pambansa Blg. 224. This provision mandates that no preliminary injunction shall be granted without notice to the defendant. The amendatory provision was enacted to prevent the indiscriminate issuance of ex parte preliminary injunctions. While a judge may issue a temporary restraining order for a period not exceeding twenty days if great or irreparable injury would result before the matter can be heard on notice, this order must be served on the defendant, and the judge must determine within the twenty-day period whether to grant or deny the preliminary injunction. In this case, the preliminary injunction was issued without any notice or hearing, directly contravening the law. On the jurisdiction of the respondent court: The respondent court lacked jurisdiction to hear and decide the basic complaint. The complaint raised issues concerning intra-corporate machinations, including alleged falsification of corporate records, misappropriation of corporate funds, fraudulent transfer of shares, and usurpation of corporate offices. These matters are clearly intra-corporate disputes that fall within the exclusive and original jurisdiction of the Securities and Exchange Commission (SEC) pursuant to Section 5 of Presidential Decree No. 902-A. The purpose of PD 902-A was to centralize the adjudication of such disputes with the SEC to promote efficiency and expertise. The jurisdiction of a tribunal is determined by the statute in force at the time of the commencement of the action, and at the time the derivative suit was filed on May 24, 1982, jurisdiction over intra-corporate disputes had already been transferred to the SEC.
Main Doctrine
A preliminary injunction cannot be granted without notice and hearing, except for a temporary restraining order not exceeding twenty days. Furthermore, intra-corporate disputes fall under the exclusive jurisdiction of the Securities and Exchange Commission, not the Court of First Instance.