G.R. No. L-104033 December 27, 1993
NOE S. ANDAYA, petitioner, vs. LISANDRO C. ABADIA, RENE R. CRUZ, VICTOR M. PUNZALAN, LYSIAS C. CABUSAO, JOSE O. BARNUEVO, JOSE M. FORONDA, LAMBERTO TORRES, EDGAR C. GALVANTE, EMERSON C. TANGAN, PRIMITIVO A. SOMERA, and BENJAMIN N. SANTOS, SR., respondents.

FACTS

Petitioner Noe S. Andaya filed a complaint for “Injunction and Damages with Restraining Order and/or Preliminary Injunction” (Civil Case No. Q-91-10470) before the Regional Trial Court (RTC) of Quezon City against the respondents, who were directors of the Armed Forces and Police Savings and Loan Association, Inc. (AFPSLAI). Andaya alleged that the respondents, acting in concert and with grave abuse of authority, convened an illegal meeting of the AFPSLAI Board of Directors, reorganized the management, and ousted him from his positions as President and General Manager without just cause and in violation of due process, causing him moral and exemplary damages. He prayed for a temporary restraining order and a writ of preliminary injunction to prevent the implementation of the reorganization and to restrain respondents Punzalan and Tangan from assuming his offices. The RTC initially granted a temporary restraining order. Respondents filed an Urgent Motion to Dismiss on the ground that the complaint raised intra-corporate controversies over which the Securities and Exchange Commission (SEC) has exclusive original jurisdiction. Petitioner filed an amended complaint impleading additional defendants (Central Bank officials) in an attempt to remove the corporate character of the case. The RTC, through Judge Pedro T. Santiago, issued an order dismissing the case for lack of jurisdiction insofar as the original respondents were concerned, ruling that the causes of action (illegal notices of meetings, election and tenure of officers, and removal) were corporate matters governed by the AFPSLAI By-Laws and falling under the exclusive jurisdiction of the SEC pursuant to P.D. No. 902-A. The court denied petitioner’s motion for reconsideration, maintaining that the substance of the complaint against the original defendants remained intra-corporate. Petitioner appealed to the Supreme Court.

ISSUE

Whether the Regional Trial Court has jurisdiction over the complaint for injunction and damages filed by petitioner against the corporate directors of AFPSLAI, or whether the case involves intra-corporate controversies falling under the exclusive original jurisdiction of the Securities and Exchange Commission.

RULING

The Supreme Court ruled that the Regional Trial Court correctly dismissed the case for lack of jurisdiction. The allegations in the complaint, even as amended, unquestionably reveal intra-corporate controversies. The acts complained of—the illegal convening of the AFPSLAI Board of Directors meeting, the voting for reorganization of management, and the ouster of petitioner from his corporate offices—are matters governed by the AFPSLAI By-Laws and specifically fall under the jurisdiction of the SEC as provided in Section 5 of P.D. No. 902-A, which grants the SEC original and exclusive jurisdiction over controversies arising out of intra-corporate relations and controversies in the election or appointment of directors, trustees, officers, or managers. The claims for damages are merely incidental to and inextricably linked with these corporate controversies, and the SEC has the authority to award such consequential damages in the exercise of its adjudicative powers. The mere invocation of violations of the Civil Code on human relations does not divest the SEC of jurisdiction, as specific corporate by-laws govern the terms of office. Therefore, the orders of the RTC dated 14 November 1991 and 10 February 1992, dismissing the case against the respondents for lack of jurisdiction, are affirmed.