GR 92481; (November, 1990) (Digest)
G.R. No. 92481 November 9, 1990
MANUEL G. VIRAY and JOSE EDUARDO J. ALARILLA, petitioners, vs. COURT OF APPEALS (Tenth Division), HON. DEMETRIO BATARIO JR., Presiding Judge of RTC-Manila Branch 48, LUISITO MAGPAYO, ENRIQUE C. ARANETA, LORENZO M. HOCSON, JOSE GERARDO M. MANALO, JR. and JOSE S. FERNANDEZ, respondents.
FACTS
The dispute originated from a Memorandum of Agreement (MOA) executed in March 1989 between Luisito Magpayo and Manuel Viray for the transfer of 99.91% of Ocean Terminal Services, Inc. (OTSI) shares for P68 million. Viray’s group assumed control of OTSI. Subsequently, Magpayo unilaterally rescinded the MOA, alleging non-compliance, and demanded the return of OTSI’s control and assets. Viray contested the rescission, claiming no default. Magpayo filed a complaint for judicial confirmation of the rescission in the Regional Trial Court (RTC) of Manila. The RTC issued a temporary restraining order (TRO) and later a writ of preliminary injunction, restraining Viray and Alarilla from acting as OTSI officers and from selling corporate assets. Concurrently, Viray filed a complaint with the Securities and Exchange Commission (SEC) to prevent Magpayo from interfering with OTSI’s management, leading to a conflict of jurisdiction.
ISSUE
The primary issue is whether the RTC or the SEC has primary jurisdiction over Magpayo’s complaint for rescission of the MOA involving the transfer of controlling shares of OTSI.
RULING
The Supreme Court ruled that the RTC properly exercised jurisdiction. The legal logic hinges on the nature of the action and the applicable law at the time. Magpayo’s complaint sought judicial confirmation of the rescission of the MOA and the return of OTSI’s control and assets. This was essentially an action for rescission of a contract, a matter inherently civil and not intrinsically a corporate dispute falling under the SEC’s exclusive jurisdiction. The Court emphasized that jurisdiction is determined by the allegations in the complaint. The complaint did not primarily involve intra-corporate controversies relating to the internal affairs of OTSI but focused on the validity and enforcement of the contractual MOA between the parties. Consequently, the RTC had jurisdiction to hear the case and issue the ancillary writ of preliminary injunction to preserve the status quo pending litigation. The Court dismissed the petition, upheld the RTC’s jurisdiction and the propriety of the injunction, and directed the trial court to proceed with the case. The Court also admonished the parties against forum-shopping but opted to resolve the case on its merits given the important issues presented.