Torres v. The Honorable Court of Appeals
REITERATIONFacts
1. The Antecedents: Petitioner Ramon T. Torres, a member and former Commodore of the Manila Yacht Club, Inc. (MYC), lent his speedboat, ALLEGRO, to MYC for free use during the China Sea Race. MYC subsequently damaged the ALLEGRO while using it and repaired it on its premises. After petitioner's term as Commodore expired, MYC, through private respondent Zaldarriaga, demanded payment for mooring and yard space charges for the ALLEGRO from May 1984 to February 1986, totaling P91,390.00. Petitioner protested these charges, asserting MYC had no right to demand them given the circumstances. Despite his protest, MYC posted his name on the bulletin board as a delinquent member for an outstanding amount of P19,300.00, a sanction permitted by MYC's By-Laws for unpaid indebtedness. 2. Procedural History: To avoid embarrassment, petitioner paid the P19,300.00 under protest and reserved his right to recover the amount. He then filed a complaint with the Regional Trial Court (RTC) of Manila seeking reimbursement of the paid amount, along with moral and exemplary damages and attorney's fees. The RTC initially dismissed the case for lack of jurisdiction, ruling it was an intra-corporate controversy falling under the exclusive jurisdiction of the Securities and Exchange Commission (SEC). Upon reconsideration, the RTC allowed petitioner to present evidence. However, MYC filed another motion to dismiss, reiterating the jurisdictional issue. The RTC, on November 21, 1988, again dismissed the case, finding the issues inextricably intertwined with intra-corporate matters. Petitioner appealed to the Court of Appeals (CA), which affirmed the RTC's dismissal on January 26, 1990, holding that the enforcement of corporate by-laws against a member constituted an intra-corporate dispute within the SEC's jurisdiction. 3. The Petition: Petitioner filed the instant appeal by certiorari under Rule 45 of the Rules of Court, assailing the CA's decision. He argued that the CA erred in not applying the controlling case of DMRC Enterprises vs. Este Del Sol Mountain Reserve, Inc. and in holding that the SEC has exclusive and original jurisdiction. Petitioner contended that his case was not an intra-corporate controversy but a simple action to recover an amount paid under protest, plus damages. The Supreme Court, however, found no reversible error in the CA's decision, emphasizing that the controversy, stemming from the assessment of charges and the enforcement of MYC's by-laws against a member, was undeniably intra-corporate and thus within the exclusive jurisdiction of the SEC.
Issue(s)
Whether the respondent Court of Appeals erred in sustaining the dismissal of the complaint on the ground that the case falls within the exclusive jurisdiction of the Securities and Exchange Commission; specifically, whether the assessment of mooring and yard charges and the posting of a member's name as delinquent constitutes an intra-corporate dispute. Whether the controversy is a simple action by a creditor against a debtor, or if it involves the enforcement of the Manila Yacht Club's (MYC) by-laws against a member, and whether the claim for damages is inextricably linked to the validity and propriety of the MYC's actions.
Ruling
The Supreme Court denied the petition for review on certiorari, affirming the decision of the Court of Appeals. The Court held that the case involves an intra-corporate controversy and thus falls within the original and exclusive jurisdiction of the Securities and Exchange Commission.
Ratio Decidendi
On the issue of jurisdiction and the nature of the dispute: The Supreme Court reiterated that Section 5 of P.D. No. 902-A grants the Securities and Exchange Commission (SEC) original and exclusive jurisdiction over controversies arising out of intra-corporate relations. The Court found that the controversy, stemming from the assessment of mooring and yard charges against petitioner as a member of the Manila Yacht Club, Inc. (MYC) and the subsequent posting of his name as a delinquent member due to non-payment, is undeniably an intra-corporate dispute. Both the assessment and the posting were made by MYC against petitioner in his capacity as a member. Therefore, the regular courts, including the RTC and the CA, correctly ruled that they have no jurisdiction over the subject matter. On the nature of the controversy and the claim for damages: The Court clarified that the case is not a simple action by a creditor against a debtor. Instead, the core of the dispute lies in the enforcement of the MYC's by-laws against a member. The assessment of charges and the sanction of posting a delinquent member's name are actions taken by the corporation against one of its members, directly arising from their intra-corporate relationship. The petitioner's claim for damages is inextricably linked to the validity and propriety of the MYC's actions taken pursuant to its by-laws, which are matters of internal corporate governance. The validity or propriety of the defense interposed by the petitioner, which hinges on the circumstances of the free use of his speedboat and the damages it sustained while under MYC's care, is a matter that MYC, as a corporation, has the primary duty to resolve concerning its member. Thus, the dispute is intrinsically an intra-corporate matter.
Main Doctrine
A controversy arising from the enforcement of a by-law against a member of a non-stock corporation, which involves the assessment of charges and the posting of delinquent members, falls within the exclusive jurisdiction of the Securities and Exchange Commission as an intra-corporate dispute.