G.R. No. 198124 . September 12, 2018.
JOHN CARY TUMAGAN, ALAM HALIL, AND BOT PADILLA, PETITIONERS, VS. MARIAM K. KAIRUZ, RESPONDENT.

FACTS

Respondent Mariam K. Kairuz filed a complaint for forcible entry before the Municipal Circuit Trial Court (MCTC) against petitioners John Cary Tumagan, Alam Halil, and Bot Padilla. She alleged that on May 28, 2007, the petitioners, conspiring with armed men, used force, intimidation, and strategy to oust her from a 5.2-hectare property in Tuba, Benguet, which she claimed to be in actual and physical possession of. The petitioners padlocked the gates, posted guards, and excluded her from the premises.
In their answer, petitioners asserted they acted as agents of Bali Irisan Resources, Inc. (BIRI), the corporate owner of the property. They detailed that the property, including Kairuz Spring, was sold to BIRI under a Memorandum of Agreement (MOA) involving the Kairuz family. Petitioners claimed Mariam, who succeeded her late husband in BIRI’s Management Committee, had committed acts contrary to BIRI’s interests, leading to a dispute over the MOA’s terms. The acts on May 28, 2007, were characterized as BIRI’s lawful exercise of its right to secure its corporate property from unauthorized entry, particularly by Mariam, whom they considered persona non grata.

ISSUE

Whether the MCTC had jurisdiction over the ejectment complaint, or if the case constituted an intra-corporate dispute falling under the exclusive jurisdiction of the Regional Trial Court.

RULING

The Supreme Court ruled that the MCTC had no jurisdiction. The complaint was properly dismissible as it involved an intra-corporate controversy. The legal logic hinges on the nature of the dispute as determined by a combination of the relationship between the parties and the subject matter of the controversy. The “relationship test” examines whether the conflict arises from intra-corporate relations between the corporation and its stockholders. The “nature of the controversy test” asks whether the dispute concerns the corporation’s internal affairs or governance.
Applying these tests, the Court found the dispute was intra-corporate. First, the relationship was intra-corporate: Mariam was a stockholder and a member of BIRI’s Board and Management Committee, while petitioners were corporate officers or agents acting under BIRI’s directives. Second, the controversy’s nature pertained to corporate rights and obligations under the MOA. The act of excluding Mariam from the property was intrinsically linked to BIRI’s enforcement of the MOA terms against a shareholder allegedly in default, relating to the use and management of corporate property. Therefore, the ejectment case was not a simple issue of prior physical possession but was embroiled in and inseparable from an intra-corporate dispute over contractual rights and corporate governance. Consequently, jurisdiction lay with the RTC acting as a special commercial court, not the MCTC. The Court reversed the Court of Appeals and reinstated the dismissal of the complaint for lack of jurisdiction.