Patricio de Dios vs. Justo de Dios

[SEC-AC NO. 226. January 2, 1990.] PATRICIO DE DIOS, GODOFREDO DE DIOS, FILEMON DE DIOS AND LUCIO TIANCO , petitioners-appellants , vs . JUSTO DE DIOS, JOSE DE DIOS, MA. FILOMENA DE DIOS, RAMON DE DIOS, BENITO DE DIOS, TEODORO DE DIOS, MANUEL DE DIOS , respondents-appellees . O R D E R This is an appeal from the order of the hearing officer dated March 23, 1988 denying the motion for reconsideration filed by petitioners to the order dated June 3, 1986. The antecedent facts are as follows: On May 27, 1983, the instant petition docketed as SEC Case No. 2466 was filed by petitioners praying among other things, the declaration of the petitioners as duly elected directors of the company and that all acts of the present board of directors be declared irregular, null and void. On July 27, 1983, respondents filed a motion to dismiss on the ground that petitioners lack personality and standing to institute said petition. In an order dated November 21, 1983 the hearing officer denied the motion to dismiss, in effect assuming jurisdiction over the case or treating the subject matter therein as a controversy in the election of directors. On December 27, 1983 respondents filed a motion for reconsideration to the preceding order. On January 5, 1984, petitioners filed their opposition thereto, but before deciding on the motion for reconsideration, an amended petition was filed on January 23, 1984 by petitioners with the following prayers: 1. they be declared as duly elected directors of the company; 2. all acts of the present Board of Directors be declared irregular, null and void; 3. the present Board of Directors be directed to cease and desist from acting as such; 4. respondents be declared to pay petitioners actual or compensatory, moral and exemplary damages, attorney's fees, expenses of litigation and costs of suit. On March 5, 1984, respondents filed a motion to dismiss Amended Petition on ground that the Petitioners lack personality and standing to institute the petition such that SEC does not have jurisdiction over the claim for damages. On June 3, 1986, hearing officer issued an order declaring the controversy being moot and academic by virtue of an election of the members of the Board during the annual stockholders meeting on February 4, 1986 as admitted by petitioners in SEC Case No. 2971 . On June 23, 1986, petitioners sought for a reconsideration of the said Order on the ground that the election of petitioners as members of the Board on February 19, 1983 was not the only issue, considering that they are also claiming for damages (actual, moral, exemplary, attorney's fees). Such claim could not have become moot and academic. The respondents filed their opposition thereto on July 9, 1986. On March 23, 1988, hearing officer in an order denied petitioners motion for reconsideration for lack of merit. Hence, the instant appeal to the denial order on the following grounds: 1. The hearing officer erred in holding that the Commission has no jurisdiction to hear and decide claims for damages. 2. The hearing officer erred in holding that the intra-corporate dispute has become moot and academic. From the foregoing it can be deduced that the issue to be decided is whether or not SEC has jurisdiction to hear and decide claims for damages where the main controversy has become moot and academic. The hearing officer in his order dated March 23, 1988 ruled that: "Nowhere in the provisions of PD 902-A as amended, which governs the jurisdiction of SEC over intra-corporate disputes, that expressly confer upon this Commission the power to hear and decide claims for damages. This is consistent with the well settled principle that jurisdiction must be expressly conferred and cannot be presumed . . ." "Even granting arguendo that this Commission can award damages as an incident to the main case, still the claim for damages cannot be sustained since the intra-corporate dispute of the instant case has become moot and academic." Appellants however argue that the Commission has jurisdiction citing that paragraph m, Sec. 6 of PD 902-A, as amended by PD 1758 provides that the Commission has the power: "(m) To exercise such other powers as may be provided by law as well as those which may be implied from or which are necessary or incidental to the carrying out of the express powers granted to the Commission to achieve the objectives of this Decree". After considering the above arguments of the parties, the Commission finds the appeal to be without merit. Citing the case of Philex Mining Corporation vs. Reyes, G.R. No. L-57707, November 19, 1982, (118 SCRA 602), the Supreme Court acknowledges the jurisdiction of this Commission over the claims for damages in intra-corporate controversies. Thus the Honorable Court held: "Evident from the foregoing is that an intra-corporate controversy is one which arises between a stockholder and the corporation. There is no distinction, qualification, nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations. The issue is whether or not a corporation is bound to replace a stockholder's lost certificate of stock is a matter purely between a stockholder and the corporation. It is a typical intra-corporate dispute. The question of damages raised is merely incidental to that main issue . (emphasis supplied) Thus, where the main cause of action is intra-corporate and the claim for damages is merely incidental to the main cause of action, then the Commission has jurisdiction to entertain the same. The award for damages as an incident to the main issue presupposes the existence of intra-corporate dispute. In the case at bar, the issue on damages remains to be the only issue to be decided since the main cause of action has become moot and academic. The issue on damages has ceased to be incidental and SEC does not have the power to award damages independently of the intra-corporate controversy. Being the only issue left, the same must be filed with the regular court. WHEREFORE, premises considered, the herein appeal by petitioners is hereby DENIED. LexLib SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (SGD.) GONZALO T. SANTOS, JR. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner Associate Commissioner (SGD.) ARMANDO Z. GONZALES (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner