Transfarm & Co., Inc. v. Daewoo Corporation
REITERATIONFacts
1. The Antecedents: Transfarm & Co., Inc. and Transdaewoo Automotive Manufacturing Company (TAMC) entered into a joint venture agreement with Daewoo Corporation and Daewoo Motor Co., Ltd. (DMCL) in 1994 for the delivery, assembly, production, and distribution of Daewoo cars in the Philippines. The agreement stipulated that TAMC would be incorporated with Transfarm owning 70% and Daewoo 30% of the shares, and Transfarm would be the exclusive distributor of Daewoo cars in the Philippines. A key provision of the agreement mandated that any disputes arising from it would be settled by arbitration in Hongkong, though the agreement itself would be governed by Philippine law. The relationship soured in December 1997, leading to legal action. 2. Procedural History: Transfarm and TAMC initiated a complaint against Daewoo and DMCL before the Regional Trial Court (RTC), Branch 5, of Cebu City, seeking an injunction to prevent the respondents from conducting automotive business in the Philippines. Daewoo and DMCL moved to dismiss the case, arguing that it constituted an intra-corporate dispute falling under the exclusive jurisdiction of the Securities and Exchange Commission (SEC). The RTC denied this motion on March 25, 1998, ordering the defendants to file their answers. Subsequently, Transfarm and TAMC filed a petition for certiorari, prohibition, and mandamus with the Court of Appeals. On July 29, 1999, the appellate court reversed the RTC's decision, ruling that the SEC had jurisdiction and ordering the dismissal of the complaint. A motion for reconsideration was denied. 3. The Petition: The present petition is filed by Transfarm & Co., Inc. and Transdaewoo Automotive Manufacturing Company for Review on Certiorari under Rule 45 of the Rules of Court, assailing the decision and resolution of the Court of Appeals. Petitioners argue that the appellate court erred in declaring that the SEC had jurisdiction over the case. However, during the pendency of the petition, Republic Act No. 8799, the Securities Regulation Code, was enacted, transferring the SEC's jurisdiction over intra-corporate disputes to the Regional Trial Courts. The Supreme Court, applying the principle that procedural statutes generally apply to pending cases, found that the RTC, not the SEC, had jurisdiction over the dispute as it was not filed with nor pending final resolution by the SEC. Consequently, the Supreme Court set aside the appellate court's decision and remanded the case to the RTC for further proceedings.
Issue(s)
Whether the Regional Trial Court has jurisdiction over the case, considering the enactment of Republic Act No. 8799 (The Securities Regulation Code) during the pendency of the case. Whether the dispute constitutes an intra-corporate dispute exclusively cognizable by the Securities and Exchange Commission.
Ruling
The Supreme Court set aside the decision of the Court of Appeals and remanded the case to the Regional Trial Court of Cebu City for further proceedings. The Court ruled that the Regional Trial Court has jurisdiction over the case.
Ratio Decidendi
On the jurisdiction of the Regional Trial Court: The Court held that statutes regulating court jurisdiction and procedures are generally construed to be applicable to actions pending and undetermined at the time of their passage. Republic Act No. 8799, also known as The Securities Regulation Code, transferred the jurisdiction over cases enumerated under Section 5 of Presidential Decree No. 902-A from the SEC to the Courts of general jurisdiction or the appropriate Regional Trial Court. The instant case was neither filed with the SEC nor pending before it for final resolution at the time of the enactment of R.A. 8799. Therefore, it is clearly cognizable by the RTC under the amendatory law. The Court emphasized that the SEC retains jurisdiction only over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of the Code, and pending suspension of payments/rehabilitation cases filed as of June 30, 2000. Since this case did not fall under these exceptions, the RTC's jurisdiction was affirmed. On whether the dispute constitutes an intra-corporate dispute: While the Court did not directly rule on the nature of the dispute as an intra-corporate matter in its final disposition, its ruling on jurisdiction implicitly acknowledges that such disputes, if not yet submitted for final resolution to the SEC, are now within the purview of the RTC. The core of the issue before the CA was the jurisdiction of the SEC, which was subsequently altered by R.A. 8799. The Supreme Court's decision to remand the case to the RTC signifies that the RTC is the proper venue to hear and decide the case, irrespective of its classification as an intra-corporate dispute, given the new statutory framework.
Main Doctrine
Cases involving intra-corporate disputes, which were previously under the exclusive jurisdiction of the Securities and Exchange Commission, are now cognizable by the Regional Trial Courts under Republic Act No. 8799 (The Securities Regulation Code), even if pending at the time of its enactment, unless already submitted for final resolution by the SEC.