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REYNALDO M. LOZANO v. ELIEZER R. DE LOS SANTOS

FACTS:

This case involves a dispute between petitioner Reynaldo M. Lozano and respondent Antonio Anda. Petitioner filed Civil Case No. 1214 for damages against respondent before the Municipal Circuit Trial Court (MCTC), Mabalacat and Magalang, Pampanga. The dispute arose out of their plan to consolidate two jeepney drivers' and operators' associations into a single association. The consolidation was still a proposal and had not been approved by the Securities and Exchange Commission (SEC). Petitioner alleged that respondent refused to recognize the results of the election for president of the consolidated association and continued to collect dues from his association's members despite several demands to desist. Respondent moved to dismiss the complaint for lack of jurisdiction, claiming that jurisdiction was with the SEC. The MCTC denied the motion, but respondent filed a petition for certiorari before the Regional Trial Court, Branch 58, Angeles City, which ordered the MCTC to dismiss the case and affirmed this decision on reconsideration. Petitioner then filed this petition for certiorari to set aside the decision of the trial court.

ISSUES:

  1. Whether the Securities and Exchange Commission (SEC) has jurisdiction over a case involving damages between heads/presidents of two associations who intended to consolidate/merge their associations but not yet approved and registered with the SEC.

  2. Whether the controversy between the parties falls under intracorporate or partnership relations, thereby subjecting it to the jurisdiction of the SEC.

RULING:

  1. The Supreme Court held that the SEC does not have jurisdiction over the case. The dispute between the heads/presidents of two associations arose from their plan to consolidate their jeepney drivers' and operators' associations. However, the proposed consolidation was still pending approval by the SEC, and the articles of consolidation had not been submitted. The SEC’s jurisdiction is limited to cases involving intracorporate or partnership relations, and here, the dispute did not involve an intracorporate or partnership relationship. Thus, the SEC has no jurisdiction over the complaint.

  2. The Supreme Court held that the dispute between the parties does not fall under intracorporate or partnership relations. Although the associations to which the parties belong are registered with the SEC, they are separate entities. The dispute between the parties is between members of separate and distinct associations, and they do not have an intracorporate relationship. Therefore, the SEC does not have jurisdiction over the case.

PRINCIPLES:

  • The jurisdiction of the SEC is determined by a concurrence of two elements: the status or relationship of the parties and the nature of the question subject to their controversy.

  • The SEC's jurisdiction is limited to cases involving intracorporate or partnership relations and disputes intrinsically connected with the regulation of corporations, partnerships, or associations or dealing with their internal affairs.

  • Consolidation of associations becomes effective only upon issuance of the certificate of consolidation by the SEC.

  • Corporation by estoppel applies when individuals assume to form a corporation and exercise corporate functions and enter into business relations with third persons.

  • Jurisdiction is fixed by law and cannot be acquired or waived by the parties or conferred by court acquiescence.