Malayan Integrated Industries Corporation v. Mendoza
REITERATIONFacts
The Antecedents: Private respondents, heirs of the late Bonifacio Abuyen, filed a complaint against petitioner Malayan Integrated Industries Corporation (MIIC) for accounting, appraisal, and distribution of their deceased father's shares, dividends, salary, and benefits from the corporation. They alleged that Bonifacio Abuyen was an incorporator and shareholder who never received any dividends, salary, or benefits from the time of incorporation until his death. Procedural History: The case was filed before the Regional Trial Court (RTC) of Makati. MIIC filed an Answer with Affirmative Defenses, asserting that the RTC lacked jurisdiction over the subject matter as it was an intra-corporate affair exclusively cognizable by the Securities and Exchange Commission (SEC) under Presidential Decree No. 902-A. MIIC also claimed the action was barred by a prior SEC order dated December 15, 1982. The RTC initially scheduled a hearing for the affirmative defenses but later issued an order deeming MIIC to have waived its right to present evidence on these defenses due to the counsel's failure to appear. MIIC filed a Motion for Reconsideration, which the RTC denied, categorically ruling that it had jurisdiction over the subject matter, stating it was not an intra-corporate squabble. The Petition: MIIC filed a petition for Certiorari and Prohibition with Restraining Order before the Supreme Court, assailing the RTC's jurisdiction.
Issue(s)
Whether the Regional Trial Court (RTC) has jurisdiction over an action for accounting and payment of the fair value of shares, dividends, and benefits filed by heirs of a deceased shareholder against a corporation, considering it as an intra-corporate dispute. Whether the action is an intra-corporate dispute falling under the exclusive jurisdiction of the Securities and Exchange Commission (SEC) pursuant to Presidential Decree No. 902-A. Whether the principle of res judicata applies, given a prior SEC order dismissing a similar complaint.
Ruling
The petition is GRANTED. The Order dated June 17, 1986, of the Regional Trial Court of Makati in Civil Case No. 13460 is SET ASIDE, and the restraining order earlier issued is made permanent. The Supreme Court ruled that the RTC has no jurisdiction over the subject matter of the case.
Ratio Decidendi
On the jurisdiction of the RTC and the nature of the dispute: The Supreme Court held that the determination of jurisdiction is based on the allegations in the complaint. The complaint sought an accounting, appraisal, and distribution of shares and benefits, describing an intra-corporate conflict between stockholders and the corporation. Therefore, the RTC erroneously assumed jurisdiction. Section 5(b) of Presidential Decree No. 902-A grants the SEC original and exclusive jurisdiction over controversies arising out of intra-corporate relations. The complaint's prayer for accounting and distribution of shares and benefits directly pertains to the rights and obligations between a shareholder (through his heirs) and the corporation, making it a quintessential intra-corporate dispute. The complaint lacked any averments of fraud or misrepresentation that would bring it under Section 5(a) of the decree. On whether the action is an intra-corporate dispute under PD 902-A: The Court emphasized that Section 5(b) of Presidential Decree No. 902-A grants the SEC original and exclusive jurisdiction over controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates, and between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates. The complaint's prayer for accounting and distribution of shares and benefits directly pertains to the rights and obligations between a shareholder (through his heirs) and the corporation, making it a quintessential intra-corporate dispute. The Court noted that the complaint lacked any averments of fraud or misrepresentation that would bring it under Section 5(a) of the decree. On the application of res judicata: The Court also pointed out that the demands made by the private respondents were already barred by res judicata, as the SEC had previously denied similar demands in its order dated December 15, 1982. This prior ruling by the SEC on the same matter constituted a final judgment on the merits, precluding the relitigation of the same issues in another forum.
Main Doctrine
Actions for accounting and payment of fair value of shares, including dividends and benefits, arising from shareholder-corporation relations, fall under the exclusive jurisdiction of the Securities and Exchange Commission (SEC) as intra-corporate disputes, not the regular courts. A prior SEC ruling on the same matter may also bar subsequent actions under the principle of res judicata.